Yahoo and Google Strike a Syndication Deal

June 13th, 2008

Yesterday Yahoo and Google announced a formalized deal for ad syndication. Google ads will now run along side Yahoo paid search ads in Yahoo search result pages. This move is a significant step away from a Yahoo + Microsoft merger but does not eliminate the possibility completely.

This move is bad for the search marketing industry as it further solidifies Google’s dominant position. According to Nielsen Online Google already owns 62% of online searches and Yahoo has 17.5%. While Google wont capture Yahoo’s entire slice of the pie, it will capture some, thus increasing its dominant market position. Competition is good as it fuels innovation and differentiation.

A search landscape dominated by Google reduces the chance of competition and could slow or stop innovation. I think our industry would be better served by a Yahoo/MSN merger so a solid competitor can emerge to challenge Google