Microsoft (Bing) – Yahoo Search Deal – Impact On India? Advertisers? Publishers?

So the cat is out of the bag or in this case Bing has gone Bingoo (two o’s for Yahoo). An official press release has been sent stating a 10 year deal between Yahoo and Microsoft’s hottest new search kid Bing. We had stated in an earlier post that this deal was imminent and so it has been.

We have covered Bing and the waves it has been making the world over. But this latest announcement comes as the most important feather in Bing’s cap. It also means that Bing can officially call itself a serious Google competitor when it comes to search.

Here are the main points of the deal:

1. The term of the agreement is 10 years
2. Microsoft will acquire an exclusive 10 year license to Yahoo!’s core search technologies, and will have the right to integrate yahoo search technologies into their existing web platforms
3. Microsoft’s Bing will be the exclusive algorithmic search and paid search platform for Yahoo! sites. Display to be separate though.
4. Yahoo! will lead sales force for both companies’ premium search advertisers.
5. Self-serving ads for both companies will run via Microsoft’s AdCenter platform and prices will also be set by AdCenter’s automated auction process.
6. Inspite of the above each company will maintain its own separate display advertising business and sales force.
7. Microsoft will compensate Yahoo! through a revenue sharing agreement on traffic generated on Yahoo!’s network
8. For first 5 years of the deal Microsoft will pay Yahoo! 88% of search revenue generated via Yahoo Network.
9. A full implementation is expected to occur within 24 months following regulatory approval.
10. Yahoo! estimates a benefit to annual GAAP operating income of approximately $500 million and capital expenditure savings of approximately $200 million from this deal.

More information on the deal is available on http://www.choicevalueinnovation.com/

What does this mean for India?

India has a clear search leader in Google and Yahoo and MSN would be a distant 2nd and 3rd. This deal definitely puts the association in competition with the Giant Google. This is because India is still a growing internet market and there are a lot of Yahoo mail and Hotmail users (jointly they would surely be larger than any other internet entity in India).

So more than the west this deal as and when the integration of Microsoft bing is done across yahoo sites would mean a serious competitor to Google and a serious alternative for advertisers as well.

What’s in it for advertisers?

For advertisers its a serious alternative to Google as the only search advertising platform. Its also may create better innovation and pricing from both these entities and the beneficiary will be the advertiser.

What’s in it for publishers?

For publishers one would have to wait and watch if Microsoft and Yahoo do launch their own publisher network like Google has adsense. Given their combined strengths through this deal and the ability to attract advertisers, a publisher network might be the natural next step. Whether it will fly is another question but it would be taken very seriously if and when its announced.