expertSEM

After a tumultuous two weeks of bid, counterbid, parry, complain, repeat, it is seeming like the Microsoft – Yahoo! merger is getting ever more likely to take place. While the M & A bankers lick their chops over calculating their 1% fees off of 11 digit figures, we in trenches of the search marketing industry have viewed this chain of events with tepid malaise typical of any kind of promise we hear from Microsoft.

The idea that by buying Yahoo, MSN’s search offering will improve is comical. I remember back in 2005 when MSN first launched AdCenter, lofty goals, grand promises, new features; who could stand the wait?!? The first thing we have to remember, is up until that launch, MSN was running all their display ads through Yahoo!’s Overture system. This probably got the two companies a greater amount of pooled revenue since if you were bidding on a term in Yahoo, you were also bidding on it on MSN. The suits in Redmond looked at this situation, and decided that they didn’t need to pay anyone any fees, and thus they embarked on the grand misadventure of AdCenter.

After launch, there was a controlled phase out of the Yahoo listing feature, ultimately resulting in MSN taking the revenue which used to flow through Overture. One GIANT problem though, they wouldn’t let just anyone advertise on AdCenter. They made any advertiser, even medium sized agencies like the one I used to work for, go through an onerous process of registering, applying for credit, manual ad approval, and copious rejection of creative for EACH AND EVERY NEW CLIENT we brought on.

This made it take 4 – 6 times longer to start a campaign on MSN as compared to either Google, Yahoo, or upstart Ask.com. (*They didn’t even let mom and pops start accounts on AdCenter for the first year of its existence). That was entirely lost revenue to MSN, solely due to their horrid system. The good part, if you can call it that, was that this process was such a barrier to entry, that you would be one of only a very few advertisers on any given keyword. So the early days were marked by massive frustration, but high profits. As soon as they allowed more advertisers, the profits went down, and worse, the interface never got much easier to use. Many of the grand features were simply smoke in mirrors, such as their much lauded demographic targeting. So my experience with MSN is one of disappointment, followed by frustration.

Fast forward to 2008, and MSN wants to buy their old ad service supplier. If you are as intimate with MSN and Yahoo as the PPC Handyman, a few things will be apparent. Rebuilding a 1969 Mustang with parts from a 1964 Mustang won’t get you to a 2008 Mustang. Similarly, combining the best parts of the Yahoo system with those from MSN’s system still won’t get you anywhere near Google’s system. I love Yahoo’s navigation, their traffic is great, but compared to Google’s constant innovation and user friendliness, it just isn’t even close. I’ve tried to imagine a best case scenario of smashing AdCenter and Yahoo! Panama together, but you still end up with second place:

The boost in total inventory is significant, but not enough to de-throne the champion, on pretty much any other comparison, the result is the same, an enhanced, but still mediocre second place finish.

I’m not a wall street type, but if you want to get more traffic, a more user friendly interface, and some value, I would buy Ask.com. Are you listening MSN? Heck, just buy all of IAC Interactive and get some display advertising too. Other advice, FIRE your AdCenter team, they don’t do credit to the company that “invented” windows, made the Xbox what it is, and is ubiquitous on 90% of all computers. Don’t take my word for it, just look to see if the online division has turned a profit over the last three years.

So the big question, should we SEM industry types care about this merger? No, probably not. If it makes it through anti-trust scrutiny, and if past behavior is any indication of future, it will probably be at least a year before they actually change anything with how either AdCenter or Panama works.