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Sep

9

GooHoo in Jeopardy?

Posted by Brian Bowman, CMO, Reply.com
Filed Under Online Marketing, Research, Search

Reuters reported yesterday that the U.S. Justice Department has hired Sandy Litvak (former antitrust chief & Disney former Vice Chairman) to consult on Yahoo’s proposed search outsourcing deal with Google.

On the surface, this may seem like the normal process of evaluating near monopolies—but consider Yahoo’s strategic planning/blunders for a moment:

Plan A – Panama (aka the Google paid search killer): The company pulled the best and brighest minds from around the company and culled them into a super-search team to quickly rollout a platform capable of competing with Google. The result: they created a better platform than Overture’s first rev, but they have continued to lose search share and search revenue despite the investment. As someone that deals with Yahoo’s search team on a weekly basis, I am always shocked how frequently I have to speak to a “human” to get work done. In contrast, Google has built a highly-scalable system, Adwords editor, and a process for computer-to-computer interaction that has significantly streamlined buying clicks. Layer on top of that the Google website optimizer, and we get to learn how to spend more money, more efficiently, with Google for free.
Plan B – Sell to Microsoft for $34/share: We all know how that ended: $20 billion in eroded market cap and, as of this morning, they are trading below $18/share.
Plan C – Outsource Paid Search to Google: We will see how this plays out. Reply! spends millions in paid search across all the major search engines, and I can tell you that Yahoo has less reach, with lower CPCs, than Google. The rumors are that the GooHoo deal (Google serving ads on Yahoo) starts in October. Advertisers I have spoken with are concerned that minimum CPCs will increase 15-20% on Yahoo, getting closer to Google levels. Then the Justice Department hires Sandy, and maybe the deal gets blocked. After all, I am not sure if 90% ownership is a monopoly, but we could always ask Microsoft for their input.
Plan D – Sell to Microsoft for $25/share: I have no data, knowledge, or insight into this possibility; I would just find it painfully ironic if the Google search deal falls through and Yahoo has to jump back into Microsoft’s arms to create a viable alternative to Google’s search dominance.

Search is critical to those of us in online acquisition and it remains to be seen if GooHoo is a good or bad thing.

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