Yahoogle's Demise: Yahoo's Loss Could Turn Into A Win; Doubts About Microsoft's Interest

With Jerry Yang seeming to beckon Microsoft (NSDQ: MSFT) back to the bargaining table now that its search ad pact with Google is dead, ad executives speaking in between sessions at Ad:Tech NY think the company should try to right itself instead of seeking another savior. Most ad agency execs I spoke to throughout the day weren't even aware the planned Google (NSDQ: GOOG) partnership had been scuttled. Still, no one was remotely surprised by the news.

As for what this means for Yahoo (NSDQ: YHOO), there was less certainty. One exec, who didn't want to be identified because of work the company does with Microsoft, said Yahoo's situation is akin to hitting bottom, giving it the opportunity to decide where it wants its place in the search business to be—or if it wants to abandon the space and build on its stronger display. Overall, several people said they thought attempts to resurrect the Microsoft talks would ultimately be fruitless. As for those willing to go on the record, there was a lot of indifference. Matt Spiegel, CEO of Omnicom Media Group Digital, said: "I don't know if this is what Microsoft needed to make a decision or if they still don't care." Would a Microsoft tie-up benefit Yahoo and what about the impact on competition in the ad industry? "Short-term, maybe not—but long-term… maybe." Other comments on Yahoo's future after the jump.
-- A minor blip: Spiegel seemed to agree with Yahoo's earlier statement reacting to Google's withdrawal: it was just an incremental part of their overall search business. "It might have become a big deal, which is why the DOJ spent so much time paying attention to it. But this was not going to move the needle significantly for Yahoo; for Google, this was much less of a concern. But now, Yahoo doesn't really have a path. If I were at Yahoo, it would give me pause and I would be thinking of what can I do next in order to innovate and make search more profitable and more relevant in general. From my perspective, I wasn't pro or con about the deal. As an agency, we need more partners that are doing important work in the online space."

-- Abandon search? Or embrace it?: Rajeev Goel, CEO of Pubmatic said the dissolution of the Google agreement could have a healthy affect on Yahoo, ultimately: "Having exhausted this gambit, it could force them to invest and focus on their search capabilities. But there's always a possibility that Yahoo could also come to the conclusion that search is not the place for them to invest; they're going to concentrate on building up our display business, as they seem to with APT, although they've said that platform will eventually include search. So the unraveling of this deal has Yahoo at a crossroads: build up search or abandon it altogether? They have tremendous amounts of data, they still have talent. They still have the pieces to be successful in search, but it all comes down to, 'can they execute it?'"

-- What antitrust?: While most of the people I spoke to felt that the combination was a present threat to competition, Frank Addante, CEO of the Rubicon Project argued that the online ad space is resistant to the traditional kinds of monopoly pressures: "The DOJ's threat to block the deal was just absurd. I don't think they're looking at the Yahoos and Googles as giant businesses with giant divisions. You gotta separate this into two parts. There's Yahoo the publisher and there's Yahoo the ad network. Under this deal, Yahoo controls a certain amount of the ad spend, as does Google. There are 400 ad networks out there competing with them for those ad dollars. The notion that that this would give Google 90 percent of the internet search market is misleading. It would give them 90 percent reach. Well, look at AOL's Platform-A (NYSE: TWX) – don't they have over 90 percent reach? The important thing to consider is that Google only controls 23 percent of online ad spend. That means that Google doesn't and will never have a monopoly on ad dollars. Advertisers will never spend all their money in one place. So in that respect, Yahoo should be able to connect to Google and every other ad network out there. That's the business we're in, right?"

Photo Credit: Yodel Anecdotal

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• Yahoo's React: Disappointed Google Withdrew, But The Deal Was Only 'Incremental' Anyway
• BREAKING: GOOGLE WITHDRAWING FROM YAHOO DEAL; Not Worth The Legal Fight

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