After a number of false starts Yahoo & Microsoft have finally agreed to join forces in the battle against search Goliath Google.

Recently Yahoo and Microsoft agreed to a 10 year partnership, although it may take up to two years for the full plan to take effect. Then the top three search engines will become just two – Google & Bing.

Goodbye Yahoo Search!

No, Yahoo isn’t closing, but it is finally throwing in the towel as a search engine. The agreement means Yahoo will be outsourcing its organic and paid search to Microsoft’s new search engine, Bing. Specific details of the agreement remain unclear, but it seems Yahoo will license its search technologies to Microsoft who will cherry pick bits to incorporate into Bing. In exchange Yahoo will receive an 88% share of all search revenues Bing generates from sites owned and operated by Yahoo.

The overall look and feel of Yahoo is expected to stay the same. However in time Yahoo’s sites will be branded with “Powered by Bing.” The biggest change will occur behind the scenes when Bing’s organic and paid search algorithms become the main platform for Yahoo’s web sites. This merging of technologies is meant to encourage more innovation in search and make Bing a true competitive force against Google.

But will this partnership really be a good thing for advertisers and consumers? The jury’s out on this.

Many welcome the move because of Google’s increasing global dominance in search. The hope is that Bing will become a credible alternative competitor and so undermine Google’s dominance in all things search. (The irony of monopolistic hard-playing Microsoft taking the role of David in this David & Goliath battle is not lost on most).

Some however see this merger as being detrimental and limiting options for consumers and advertisers. Google, Bing and Yahoo often present quite different search results because they each use very different search algorithms. Opponents to the merger see that taking Yahoo out of the equation will force consumers to choose between just two of the world’s largest tech giants. In addition they argue that advertisers will have less options, which means it may cost more to incorporate paid search into search marketing campaigns.

In my view the objections to the merger don’t hold water – certainly for consumers and advertisers in New Zealand. Here Google absolutely dominates the search market with a share of 95% +. This is high by global standards and the reality is that in NZ there is no real competition for Google.

Personally I’m a huge fan of Google because they are so very good at what they do. However, despite this, it would be great to have a viable alternative competitor in the market because Google’s market share here is just so high. Whether that happens or not, remains to be seen.

What do you think?

Here’s a funny T-shirt I found in a Bangkok night market, of all places…

No, you won’t find this in the Google store.

It looks like even the search colossus Google isn’t immune to the impact of the global recession.

Despite earning a staggering $4.2 billion on revenue of $21.8 billion last year Google is now aggressively trimming expenses to protect profits & stop its stock price from falling further.

Since January Google has eliminated outside contractors; curtailed some of the employee perks they’re famous for; & canned services that weren’t paying off, like their foray into radio advertising.

Google’s huge growth in revenues has fueled significant growth in the last couple of years with headcount jumping to almost 21,000 employees, compared to 10,674 at the end of 2006.  But now to further reduce costs Google has  started laying off staff & consolidating some offices.

Google’s announcement last week that it’s laying off 200 sales & marketing staff globally came as a surprise, given this is the part of the business responsible for generating advertising sales which reportedly account for 97% of Google’s revenue.

Disappointing is the fact that this decision has impacted on the Australian & New Zealand operations. Apparently the Melbourne office is being closed & the New Zealand office staff of 8 cut back significantly.

The Google NZ team is a great group of highly committed & talented people who’s efforts have undoubtedly played a key part in the significant growth of search marketing in New Zealand. Search has taken off since Google established a local office & the level of agency support we’ve experienced has been outstanding.

If Yahoo had a similar presence in the NZ market they’d no doubt be getting a far bigger share of the search cake.

According to the latest Hitwise figures Google has 92.52% of the total NZ search volume share whilst Yahoo has just 3.1% & Microsoft even less at 1.14%.

Sure, there’s much more to Google’s dominance than just having great people on the ground, but it’s certainly played a part.

Our best wishes & sincere thanks go to the local Google NZ team. Thanks guys, you’ve been terrific.

This week I’m going to get straight into things. Not because I’ve nothing to say (the reverse in fact) but there’s so much good stuff this week my views will have to wait till next time!

One of my big issues with Google is the fact that it makes its products, such as AdWords appear to be so simple a four year old could work, when the reality is that they are incredibly complex. Well, whilst I concede that it is hardly rocket science there are myriad different factors to take into account when building or running an AdWords account. One of the key ones is “quality score” which I have touched on before but think it is worth looking at again as Google have released an article which explains the basics of paid search. So please have a read of the article below as it will give those of you out there who aren’t completely au fait with AdWords to a handle on the basics… Quality scores and ad auctions

Clutter is a massive issue on the internet. And it is at its worst in the social media space. Social media sites require massive buy in (mostly in time) and unless your friends also use the particular site then your interest will invariably wane quite quickly! I’ve always felt that the “killer app” will be finding a way to connect all these social media sites and to integrate new ideas into a Central hub, for lack of a better phrase. Google around a month ago launched “Google Friend Connect” which is still in beta and not much seems to be happening. However Facebook this week released the launch date for “Facebook Connect” which is a product that ties a user’s Facebook account to other sites on the Internet. Watch this space as I have a feeling that this will be the app that will reignite people’s interest in Facebook! Checking In On Facebook Connect

Talking about social media this article is definitely worth a read as it explains that social media can be used as a direct sales tool but only if used correctly! B2B Marketers Struggle With Social Media

Sorry to all of you that have no interest in social media as this week seems be turning into a social media newsletter but backing up my argument of the current web2.0 Holy Grail of inter-site integration is news that Google has teamed up with OpenID. For those of you unfamiliar with OpenID, it is the idea that Internet users should be able to use a single username/password combination to login at any site, all via an open source protocol. Microsoft joined OpenID last week and now Google has joined the party. OpenID is far from perfect but again keep your eye on this as I think with the support of both Windows and Google it may start to make more sense! Google Now Supporting OpenID

I often find it difficult to explain the importance of having a digital “strategy”. Search in particular is often marginalized in media plans which for some businesses makes sense, but if your business relies on web sales or web based leads then your search needs a strategy. And that means balancing paid search with organic optimization. Please, please read the article linked below but if you don’t have time then just take this thought away with you:

“Paid and organic search listings work synergistically, providing entry points to your site and showing the user that you’re serious about search. They must be balanced carefully, however. Buy sponsored listings on keywords that may be difficult to obtain (or maintain) organic rankings for, and ease up on search terms for which your organic presence is firmly rooted. This will help you make the most efficient use of your marketing dollars.”

Couldn’t have put it better myself! The Organic and Paid Balancing Act

Finally for those of you like me were completely underwhelmed by Windows Vista take a sneak peek at Windows 7. Come on Microsoft!!! MS offers peek through Windows 7

And for my website of the week I’m going to recommend you check out last.fm. If like me you get a little bored of your music collection you can simply type in your favourite artist into the box in the middle of the page and in an instant the site develops a playlist based on that artist. Brilliant, and free!