Microsoft-Yahoo: No Slam Dunk for Small-Business Ads

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Microsoft's desire for a larger chunk of the growing online advertising market is driving the software giant's takeover bid for Yahoo. Online advertising in the United States could more than double from last year to 2011, according to the Yankee Group.

Acquiring Yahoo would vault Microsoft into second in the search engine business, behind only Google. A combined Microsoft-Yahoo would deliver far more search queries sprinkled with lucrative pay-per-click (PPC) advertisements, a major component of online advertising. It's no wonder Google is concerned about the threat that Microsoft's bid poses to its business, which is built on online advertising.

But Microsoft needs to do much more than sign a big check to Yahoo shareholders to make the deal work. If the takeover is successful, how might it change the landscape for businesses that purchase online advertisements to promote their e-commerce sites?

Search Engine Ranks

Despite being an Internet-directory pioneer and one of the first search engines to embrace PPC advertising, Yahoo is no longer number one in this business. It lost ground to Google both in search engine queries and in the money-making ads that surround the search results.

Comscore says Google commands 58.4 percent of U.S. search engine queries. Yahoo is second with 22.9 percent and Microsoft ranks third with 9.8 percent.

When international use of search sites comes into consideration, Google is even more dominant, with a 62.4 percent share. Yahoo remains second, but Microsoft drops into fourth, edged out by Baidu, an Asian search engine.

Could Advertisers Benefit?

If Microsoft acquires Yahoo, the deal could have some positive impact on businesses that rely on PPC advertising. For starters, advertisers would save a bit of time, having to set up and manage only two PPC ad management accounts with the major search engines instead of three, while enjoying the same ad reach.

AdCenter lets you pay a premium to emphasize certain characteristics of the visitor who will view your ad. You may target ads to a specific age range or sex--younger males, for example.
Microsoft's AdCenter offers the PPC advertiser more control than Google AdWords does in some respects, such as the ability to target demographics. AdCenter lets you pay a premium to emphasize certain characteristics of the visitor who will view your ad, and as a result you may target ads to a specific age range or sex. For example, you might display ads for a shoot-'em-up computer game to young males aged 18 to 24.

Setting up an effective PPC campaign takes time. Advertisers need to research hundreds or even thousands of appropriate keywords that would trigger displays of their ads. Then the advertisers must determine the maximum economically justifiable price to bid on each keyword. Next they must develop an effective text ad using just a few dozen characters.

Other time-consuming efforts may include geotargeting--that is, limiting the ads to specific geographic areas. If you're a local service business, you don't want to waste money advertising to visitors across the country. All of this work to set up a PPC ad campaign will pay off only if your ads display widely to the appropriate audience.

Today, AdCenter doesn't have nearly the reach of AdWords, so similar ads display to far fewer visitors on Microsoft's network than on Google's. But if Microsoft can combine Yahoo's online interests with its own, its AdCenter network could more than triple in size, making it a viable alternative to Google's AdWords.

Microsoft AdCenter Import

To ease the burden of establishing a new campaign, AdCenter lets you import an existing PPC ad campaign using a CSV worksheet. But while the ability to import an ad campaign is an excellent idea, it's poorly implemented in AdCenter.

I tried to import a Google AdWords campaign into AdCenter using Microsoft's supplied worksheet. The process isn't straightforward since it requires downloading Google software and following several steps.

Google's free AdWords Editor application handles offline management of AdWords. With it you can download your campaigns from AdWords, make changes to them offline, and then go online to upload the changes to AdWords. The program also lets you export your campaign in CSV format.

Though the Microsoft CSV import template isn't exactly the same as Google's export format, I needed to spend only a few minutes working with Excel to cut and paste the data to the correct columns.

Unfortunately, the import into AdCenter did not go smoothly, and it was rife with errors. For example, some Google keywords were too long for AdCenter to accept.

Is AdCenter Worth It?

Since Google AdWords is an established ad-management system that reaches the majority of Internet users, most businesses use it for their PPC advertising. Does it make sense to clone a successful AdWords campaign and extend it to AdCenter, a relative newcomer?

Considering Microsoft AdCenter's relatively small advertising inventory and its problems importing from Google AdWords, most small to midsize advertisers probably won't find the time investment required to use AdCenter worthwhile. I believe only the largest advertisers with broad-based PPC campaigns can justify the effort it takes to create and manage AdCenter campaigns.

What Microsoft Must Do to Succeed

If Microsoft wants to make a dent in Google's PPC-advertising dominance, buying Yahoo to increase its search engine market share is only one step on the road to success.

Microsoft must move to quickly integrate Yahoo's search marketing ad management system with its own AdCenter. I wouldn't underestimate the difficulty of that task, since Yahoo took three long years to update the archaic ad management system it inherited when it purchased Overture in 2003. Yahoo's critical fumble of its new ad management system, which the company code-named Panama, served only to frustrate advertisers. Most were already enjoying the capabilities of Google's AdWords, which introduced significant enhancements practically every month, and many people wondered why Yahoo took so long to deliver something similar.

Finally, Microsoft needs to make it very easy for Google AdWords advertisers to move their existing ad campaigns to AdCenter. Whether Microsoft likes it or not, Google AdWords is now the standard PPC ad manager. AdCenter must become 100 percent compatible with AdWords and support all of AdWord's capabilities--it must become a tool that imports AdWords campaigns quickly and error-free.

Richard Morochove is an IT consultant and writer. Send him questions about using technology in your connected small to midsize business via e-mail. PC World may edit your query and cannot guarantee that all questions will be answered.

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