Posted to Ben Finklea's blog on March 3rd, 2009

Yahoo Search Gets a Makeover

The newest reality show to hit the screen is corporate giants who are badly in need of a facial. No disrespect to Joan Rivers and the new season of The Apprentice, but I’m talking about Yahoo’s new moves in search. For the past year, Yahoo has had pressure on them to do something about its search business, which is being left in the dust by Google. Yahoo is now binding its search business more closely to its market-leading display-ad business. Yahoo also announced it would start targeting display ads across Yahoo and its 500 network sites based on search queries, in what they are coining as “search retargeting”. This announcement came a week after Yahoo started showing display ads against search results. These two moves suggest that Yahoo is building case for why search should remain an integral part of the company. This also may provide a long-term advantage for Yahoo, who has an opportunity to make display, a category that it leads, more valuable.

Until now, Yahoo has targeted ads based on a web surfer’s click. Now, a web surfer’s search terms will be used to serve them ads based on keywords they’ve typed into Yahoo’s search engine. The sentiment with most advertisers are that search retargeting will likely to yield better returns than less targeted ads and provide higher quality data about search users. Merging search with other targeting data is more likely to lead to a conversion, which could mean anything from a click to a purchase. Yahoo integrating search into its display business will strengthen their overall brand equity.

Microsoft also has indicated that if Yahoo wants to combine its search business with theirs, Microsoft is interested. Yahoo has explored options such as this for its search business in the past, including an attempted search-ad deal with Google that failed to pass a regulator litmus test. Google may be sitting on the largest treasure chest of information, but it lacks the scale in display of Yahoo. Advantage Yahoo.

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