According to a report published today by the Wall Street Journal, Yahoo is closer to outsourcing its core ad search business to Google, after favorable testing of Google’s advertisements on its search pages.
The WSJ said that a deal between Yahoo and Google is increasingly likely given the status of the testing. The report also notes that such an outsourcing deal could give Yahoo a boost in its efforts to spur Microsoft into increasing its unsolicited buyout bid for the Internet search pioneer.
Yahoo may need such help if Microsoft is concerned about the additional costs it may have to bear to retain Yahoo employees.
A report in the New York Times noted “the hidden cost of ‘flight insurance’ against employee defections may also be a reason Microsoft has resisted raising its bid.”
The Times report, noted Microsoft not only paid $800 million to acquire Tellme Networks but spent an additional $100 million on employee retention perks, an average of $300,000 per employee.
Last week, Yahoo announced it would begin a limited test of using Google to deliver some search advertising. Microsoft immediately came back with a stern warning that such a partnership would hurt competition.
As we discussed last week when word of the test was annouced, such a deal between Yahoo and Google would be deviating for Domainers and all publishers, giving us only one PPC provider.
NICE POST.
The worst bankrupt is the man who has lost his enthusiasm. Let a man lose everything in the world but his enthusiasm and will come through again to success. – H.W. Arnold
Agree that a complete–or even substantial–Yahoo outsourcing of their PPC to Google is bad for domainers; and for the entire paid search industry as a whole.
Hopefully the US and EU authorities (with MS’s understandable “help,” no doubt) would stop such a clearly competition-eliminating move.