Yahoo May Bing Home the Bacon

Google may finally face some competition in the search market.

With the integration of Yahoo's and Microsoft's search businesses now well advanced—Yahoo searches are using Microsoft's Bing engine and its search ads will increasingly go through Microsoft's adCenter platform—the duo have a better chance to take on Google.

It is still a David and Goliath fight. Digital-marketing firm SearchIgnite estimates Google's share of U.S. ad spending rose nearly two percentage points to 80.2% in the third quarter, with Yahoo dropping two points to 13.4%. Bing had 6.4%. On that measure, Google is even more dominant than it is in search queries. ComScore estimates Google had 65.4% of U.S. searches in August, while Yahoo had 17.4% and Microsoft, 11.1%. Using the Interactive Advertising Bureau's estimate that $10.7 billion was spent on search advertising last year, those extra 15 points of market share are worth $1.6 billion.

Google's outsize share reflects several factors. It commands higher cost per clicks than Yahoo and Bing. People click on Google search ads more often than those on the other two. Advertisers also spend more time on their Google campaigns because of its importance in the market.

All of these factors could change. No longer having to oversee separate campaigns for Yahoo and Bing should mean advertisers dedicate more time to marketing on the combined business. Yahoo could also benefit from Microsoft's technology. SearchIgnite, using data from managing search campaigns for big advertisers, estimated in a report Tuesday that consumers using Bing clicked on search ads 2.4% of the time, compared with 1.8% on Yahoo, during a period in early July. Bing's higher click-through rate was sustained even after some Yahoo traffic was added in late July through late September.

That is good news for advertisers using Yahoo. At least in theory, they were getting more clicks on only slightly higher pricing. SearchIgnite found that Bing's costs per click—which before the test were about the same as Yahoo—rose 5.7% through July to September as Yahoo clicks began to be included. That is also positive for Yahoo: With more people clicking through on ads and on slightly higher rates, it will earn more revenue.

Indeed, SearchIgnite estimates Yahoo's revenue per thousand search impressions lagged behind Bing's by 33% before the integration. That revenue measure for the partly integrated service rose above Bing's level over the summer, theoretically translating to as much as a 51% increase for Yahoo.

Admittedly, those results may change once the integration is complete, expected by the end of the month. It will likely be a few months before there is any certainty how the combined operation will do. But it already looks clearer that Yahoo and Microsoft together will have a better shot at challenging Google's dominance than they did alone.

Learn more about IgnitionOne

Get Started Now 

or call 1-888-744-6483