Over the weekend Microsoft decided to pull its offer to purchase Yahoo. Microsoft CEO Steve Ballmer sent a letter over to Jerry Yang expressing disappointment in not being able to consummate a deal that would have created a true rival to Google. Among his many points, there are two that really stood out:

“First, it would fundamentally undermine Yahoo’s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system.”

If you are a fan of The Wire, this is equivalent to using Marlo’s name on the street. Ballmer is essentially calling out Yahoo, arguing that a deal with Google makes Yahoo a distribution channel for the Google machine instead of an innovator.

Ballmer also stated that “this would also effectively enable Google to set the prices for key search terms on both their [own] and [Yahoo’s] search platforms and, in the process, raise prices charged to advertisers on Yahoo.”

This may just be a passive shot at a collusion theory. While any sort of collusion would destroy the credibility of Google, we need to remember that the bidding system is still a “black box” to which no outsider has the complete answer.

Owning over 70% of the search space could allow Google to slightly raise prices, claiming an algorithm change. Even just raising the average CPC by a few pennies would create a revenue windfall. And advertisers would have little choice but to comply or be relegated to only Live Search placement.

As expected Yahoo’s stock took a hit – falling $4.30 on the news, raising questions as to what direction Yahoo! is heading. Many at Yahoo are not sure if they won or lost. One exec was quoted as “needing some Prozac” to face the staff.

On the other hand, there are many who believe that the folks in Redmond sidestepped a bullet. There have been reports of several Microsoft employees expressing that the company should be focusing on Windows Vista. Interestingly enough, some reports speculate that Ballmer may be at risk based on his focus on making this deal happen.

Whether this signifies the end or just the start of more activity, it is clear that the landscape will likely face dramatic changes over the next several months.

Article by Joshua Palau

Last issue we touched Consolidation in the UK Travel Market. This week Arianne discusses Travel & Search.

Every travel vertical needs to be uniquely marketed and has different trends and booking patterns associated with it. Holidays traditionally have their peak booking period in January, with a “lates” booking period towards the summer. Up to half of holiday conversions can happen over a month after the initial search, whereas car hire (Car Rental in the US) can see its highest performing period during July/August – when people, as a last minute item for their holiday, book a rental, and it has an almost immediate look-to-book time. However, for a cruise, people can take months to decide on a booking and, even once made, travel may not be for another 12-18 months. A similar pattern is often seen in the luxury market.

To effectively measure your campaigns, you should map your cookie window to these trends. Depending on the product, you may want a 30-day cookie, 90-day cookie, or more if possible (the longer the look-to-book time, i.e. the length of time that passes from the first click to the conversion, the longer you want your cookie window to be).

Also give thought to your budgets. If you sell package holidays, you will want the largest proportion of your budget available for the January-March period, but you would also want to start upweighting bids towards the end of December to ensure that you capture the traffic as it starts to increase. If your client only offers product to a certain destination, for example the luxury holidays in the Far East, your key advertising and buying periods would be different and you would no doubt want to adjust your spend to coincide with these times.

When it comes to profit margins, if you’re a reseller of flights (especially short-haul) or hotel rooms you’ll find that the profit available from your commission is tiny compared to that of a cruise or luxury holiday. If you are the operator (e.g. the airline or hotelier) your margins will be more generous. You may even operate on the “Expedia model” – where you make zero money from selling a flight,but you try and sell the customer an overall package that includes accommodation or other extras, with these other items being where you make your money. Knowing the margin can help you choose the terms you buy – for very tight margin products, it’s unlikely that you would see a return on the keyword “flights.” However, a more specific term such as “flights from Gatwick to Alicante” would probably convert better and at a more reasonable cost.

Article by Arianne Donoghue

Microsoft unveiled a much improved version of its Live Search News offering to compete with Google and Yahoo! Standard features such as aggregated news sources and integrated video and images are available in both the "browse" and "search" versions.

The overall layout is very clean and readable, sticking to just one column of news stories. Each individual news story displays 3 different news sources with a link to "More on this story" that takes you to additional News Search Results. The best feature is probably the video bar that integrates Live Search's video preview, a neat little feature that plays clips when you roll over a thumbnail of the video. If you are simply browsing the news you'll notice that the tabs along the top are familiar news categories such as Top Stories, Politics, Sports, and so on. There is also a neat IP-based local news sidebar that can be customized by modifying your “options” if your IP address happens to be in another location, and an orange breaking news bar that appears when there's a notable news story occurring. If you are searching the news for something about the presidential elections, then you'll have the option to sort your results by relevance or most recent news. You can also refine the results by your location, category, or related search terms.

While I do like the less cluttered single column layout, I can't wait for features like RSS feeds, blog results, and additional personalization options to arrive. From a webmaster perspective, it'd be very beneficial to have a simple and obvious way to submit a news feed for inclusion into News results. Live Search News will have a difficult time competing against Google News and Yahoo! News unless it can provide more of these useful features and draw upon a bigger, more authoritative pool of news sources.

Article by Thanh Duong

You know who else is unhappy with Yahoo!...Yahoo!

Is walking away from Yahoo! a smart move or a $5 billion dollar gamble?

It's not all gloom and doom...here are a few reasons to be glad that Reasons to Be Glad Yahoo Spurned Microsoft.

With Yahoo! seemingly off the table, who are now the new acquisition belles of the ball?

First Sheryl Sandberg leaves Google for Facebook and now she is looking to bring in a VP of communications with experience in public policy...namely Elliot Schrage.