This deal will affect search marketing on both sites for Search Engine Optimization and Paid Search. Here is some information on the specific changes effecting Paid Search advertisers’ campaign management, advertiser competition,and the implied customer service effects:

Account Management: Customer service greatly effects the ease of account management, but since that’s already been addressed I’ll focus more on the general effects that this merger will have on account management.

Overall, I suspect this partnership will be positive for advertisers, agencies and publishers. Microsoft adCenter’s platform has always been known for producing solid return on investment. The issue has been one of market/search share. Once the partnership implementation is complete, advertisers will need to manage one less account. Unfortunately, this will also increase bidding competition on both domains.

Platform Differences: By now most of the targeting is the same. Both providers have geo-targeting, demographic targeting, content network controls, etc. One of the few major changes will be keyword match types. Google has made the broad/phrase/exact/negative successful and easy to understand. Since Microsoft adCenter currently uses this style of match types, Yahoo! advertiser will soon as well. Good riddance to Yahoo!’s standard and advanced match.

The second positive change that will come of this transition is the death of the Yahoo! ‘bulksheet’. Yahoo! advertisers have craved an AdWords Editor-like application to replace the bulksheet for years. Microsoft has come to the rescue with it’s adCenter Desktop application. Although it’s still in beta and buggy at times, it’s miles ahead of the bulksheet in terms of usability.

One big downside regarding the switch from Yahoo!’s Panama management interface to Microsoft adCenter is that adCenter is buggy. From the management interface to the reports center, results have been known to report inconsistantly. Double and triple checks should become routine for Yahoo! advertisers who are new to Microsoft adCenter.

Customer Service: As a part of the arrangement, Microsoft will be keeping Yahoo!’s customer service staff. I see this as being one of the few great ideas that will come of the deal. I’ve worked with both of these companies managing PPC campaigns for several years now. Yahoo!’s customer service is far superior to Microsoft. To put it more clearly as to the magnitude of difference, I’ll rank the three leaders on a 1-10 scale:

• Google – 8
• Yahoo! – 9
• Bing – 3

Though these opinions are solely my own, I suspect that they cannot be far from the popular opinion.

To be fair to those who work in an outsourced adCenter call center, Yahoo!’s customer service excellence is only partially due to its great people. Yahoo! also has a system in place that supports good service and allows their people to do a great job. Unfortunately, from what I can tell, Microsoft hasn’t provided a proper environment for their service staff in the past.

I can only hope that the environmental challenges Yahoo!’s service staff will encounter with Microsoft do not reduce the great service they’ve provided over the years.

Summary: In short, I’m excited about this deal, even though many of the details are still up in the air. Together, Microsoft and Yahoo! still will not be able to truely challenge Google’s dominance in the Paid Search space, but nevertheless, this change should still produce a better sponsored search experience for users of all types.

From a paid search perspective, there’s the potential to reach nearly 100% of the search market with two search ad platforms (AdWords, adCenter). No more logging in and out, or working with bulk spreadsheets to update and optimize your Yahoo! accounts. Perhaps Yahoo! can teach adCenter specialists about adjusting minimum bid requirements at the end of the quarter when revenue pace is below projections. Yes, I’m skeptical.

While answers on the paid search side may be a little more direct, answers for developers and SEO specialists are vague and speculative. If I rank well in Bing then I’ll rank well in Yahoo? Are we in danger of losing the Yahoo! Directory or Delicious?

Despite speculation and ambiguity, our friend Rand Fishkin offers up some advice on what we need to know and what actionable steps we can take.

#1) SEO for Bing is Worth Your Optimization Effort
Bing’s algorithm, while certainly an upgrade from Live.com, still has a few noticeable preferences, such as concentration on keyword use in subdomains and root domain names. Bing’s results are, by default, “richer” than those of Yahoo! and Google. Although Yahoo! will be controlling the user interface on their end, it’s likely much of that “richness” will make its way into the Bing results inside Yahoo!. Bing also surfaces only the top 5 results for many queries, meaning a higher concentration of clicks on those top results.

#2) We May Lose Yahoo! Link Data
This change would likely see the rise of more proprietary link indices as well as the breaking of a large number of internal and external tools that rely on Yahoo! for their link data. We may not know for sure for some time to come, but it may make have a substantive impact on the link research landscape.

#3) Bing’s Webmaster Tools Are Important
If you don’t have an account with Bing Webmaster Tools, now is the time. Although not yet as robust as Google’s, Bing WMT is working hard to catch up and even surpass their rivals with features that will prove valuable for webmasters on all platforms. The data you get from Bing WMT will also be important for conducting better organic SEO campaigns on that engine, and seeing how Google & Bing may view your site differently.

#4) Yahoo! & Bing Local Become More Essential
We’re still not 100% sure of the status of local search – according to the ReadWriteWeb piece, Yahoo! may consider this a “consumer service” and not part of core search. However, if Bing is serving up local listings in the search results (as they do now), Bing’s local registration is going to become very important for local businesses. Check out Bing Local and their local listing center in the near future if this impacts you.

#5) Yahoo! Maintains UI Control for their Search Experience
This means that Yahoo!’s results ordering, layout, sidebars and searcher focus may continue to be unique from Bing, thus requiring that SEOs still pay attention to the differences in the two engines and optimize accordingly. It will be tough to know the extent of Bing’s integration until it launches, but there’s a lot of room for variation, which means complexity for SEOs.

#6) Yahoo! Will Become a More Powerful Content Competitor
With Yahoo! out of the core search business, many people, myself included, expect them to focus even more on the content side of the business. That means properties inside Yahoo! News & Media Group are going to get more attention and more investment. If you’re competing with Yahoo!’s content now, that battle may get tougher in the future.

The big takeaway from a digital marketer’s perspective is that Yahoo! pay-per-click advertising platform will eventually disappear and Yahoo! will be replacing its search index with Microsoft’s Bing. Regardless of the agreement, the actual transition and implementation is still some time away.

If you were ignoring your positions in Bing prior to this deal, then tsk-tsk.

I contend that the deal is not about partnering to battle an adversary. It’s all about bolstering a struggling profit center at Microsoft. And from Yahoo’s perspective, search is a dying technology, time to move on to the next big thing.

Steve Ballmer

Ballmer is a master of business gamesmanship and negotiated a one-sided agreement to buy Yahoo’s search market share. He orchestrated a chain of events over the past year that left Yahoo! with no upfront payment (Bartz’s “boatloads of cash”) and guaranteed income for only a portion of the agreement term. Yahoo! does all the heavy lifting, maintaining a sales force and customer service staff. Bing scales to a size where it can make a significant contribution to Microsoft’s bottom line. Brilliant!

How’d he do it? What’s the best way to stop your competitor from innovating and improving their product? Tell them you want to buy them. Tell them you like what they do, appreciate what they’ve done in the past and want to talk about an acquisition. How long did the off and on buyout/partnership talks go on between Yahoo! and Microsoft? When’s the last time Yahoo! presented anything truly innovative in search marketing? Remember the Panama launch? Seems like forever ago. Yahoo! has coasted ever since, as Ballmer put a deep freeze on Yahoo! R&D by talking deal, all the while developing a pretty darn good search engine.

On the other side of the deal – I have to believe Carol Bartz is clairvoyant. Why on earth would she agree to give up so much for so little? It’s pure speculation on my part, but, maybe she’s seen the future and search isn’t part of her vision. Perhaps she’s looking to get on board the “social” train in a huge way. After all, practically every internet user on the planet touches a Yahoo! property on a daily basis. Does she have a secret master plan to monetize those eyeballs?

The next big hurdle for the deal, the Department of Justice, will certainly push implementation into next year and beyond. It could be two years before we searchers, or the companies for that matter, see any tangible benefit from this union. That’s forever in internet years. In the meantime, Twitter and Facebook continue to grow, capturing the hearts and minds of internet users and advertisers. Will search as we know it in 2009 be relevant in 2011? It’ll be fascinating to watch what happens. And I’ve got a front row seat.

Google has succeeded for so long in part because no one really presented a legitimate challenge. Yahoo CEO Carol Bartz says out loud that “we are not a search company,” so even with their number two slot they clearly have no interest in taking on the Mountain View colossus. Microsoft’s Live Search never really captured searchers’ imaginations, and the rest are too miniscule to pose any significant threat.

Recently, Microsoft Binged and Decided that the time was right to assume the role of David to Google’s Goliath. A marketing budget estimated in the neighborhood of $80-100 million shows that they’re serious.

What Microsoft may have just done is awaken a sleeping giant. And I don’t mean the friendly “Anybody Want a Peanut” Andre the Giant; I mean the angry, choke Hulk Hogan until young children cry Andre the Giant. This isn’t to suggest that Google has been resting on its laurels over the years, but there just didn’t seem to be the immediacy and the urgency that Bing has brought on.

For instance, there’s Google Wave, a “real-time communication platform” that will be unveiled to the public later this year. Google curiously started showing off the service right about the time Bing was set to launch. Surely this was no accident. Also, James Doran of the New York Post reports that Google co-founder Sergey Brin “has assembled a team of top engineers to work on urgent upgrades to his Web service,” and that Brin “is himself leading the team of search-engine specialists in an effort to determine how Bing’s crucial search algorithm differs.”

Should Brin and the rest of Google really be so worried? The early numbers for Bing, whichever you choose to believe, are just that: early. It is still too soon to proclaim any kind of shift in searcher behavior. Many are still just hearing about Bing and the advertising blitz will ensure that more people are at least made aware of it, and many more are still likely to give Bing a try. But will they make a permanent switch? Early reviews of the engine seem mostly positive, but many seem to be viewing Bing as an accompaniment to Google, not a replacement.

Personally I think Google has little to worry about. Their search share is still in a fairly dominant position, and I think that after the newness of Bing wears off, people will go back to old reliable Google. Part of the reason I believe this is that Brin and company are obviously taking the Bing threat seriously, which will no doubt lead to more innovations from Google the Giant.

And where does all of this leave the Pay-Per-Click marketers that use Google, Yahoo, and now Bing to drive sales? Nothing internally changed during the switchover from Live to Bing, but the big difference is that a lot more eyeballs are drifting over towards Bing, and now is the time to capitalize on that. With the potential for more traffic, and in turn, sales, marketers should be looking to increase their presence in Bing and strike while the iron is hot. The buzz around Bing may or may not last, so get everything out of it while you can.

Image: Courtesy of Amazon

While the software developer and recent parent to Bing is seeking $750,000 in damages, one of its major reasons for filing the lawsuit is that it wants to be more active on the enforcement side of fraud cases. They want to create a deterrent for would-be participants in click fraud. In a recent NYT article, Tim Cranton, associate general counsel for Microsoft said:

“We think there’s a good place for enforcement, basically to say, ‘You think this is a game, cat and mouse, back and forth. At some point, once we figure out who you are, we’re going to hold you accountable for it, it’s going to be expensive, and we’re going to deter you from doing it because you’re ripping off advertisers and people online.’ “

Whoa. He sounds pretty serious. You hear that scammers? Microsoft click-police are on patrol and out to get you! And why shouldn’t they? The article goes on to say that there are already stiff legal penalties for wire and mail fraud. Why not click fraud? Good point.

This certainly won’t be the last click fraud lawsuit filed by Microsoft, or other search engines for that matter, but it will at least help set a legal precedent.

What does this mean for all those Bing paid ads? It means the streets might be a little safer, at least for those navigating through Microsoft’s neighborhood.

While most, if not all, PPC managers run some sort of click fraud monitoring system already, it’s nice to see the search engines actively pursuing some click-justice on behalf of its users. They’re lending a helping hand to make the online ad space friendlier. It’s anything but a “Problem Solved!” type of situation for PPC managers battling click fraud, but at least it’s a step in the right direction.

Image: 365_299 – Compute this! by Guin’s View

Since the launch, Powerset has gone through some changes and was recently bought by Microsoft. The higher-ups at Microsoft were impressed with Powerset’s capabilities and interface innovations, so they teamed up to create a shared vision:

To take Search to the next level by adding understanding of the intent and meaning behind the words in searches and webpages.

Today, Powerset continues to forge ahead with that same goal in mind. Over the last few months, teams from Powerset and Microsoft’s Live Search have collaborated on ideas and designs, and have come up with several projects that will be released over the next 30 days.

These projects were designed with the goal of improving Live Search and Powerset simultaneously by integrating technologies from both search engines. So, without further ado, I would like to introduce three new projects from the collaboration efforts of Powerset and Live Search.

Freebase Answers

This Wikipedia-like project is open to anyone who would like to contribute information; it is “an open, shared database of the world’s information.” Microsoft is utilizing Freebase in order to provide expanded and improved answers for Live Search. A lot of search results today don’t show answers for topical queries such as musicians, albums, and films, but by using Freebase, Live Search is able to return a topic summary that includes links, a result very similar to the Freebase Answers in Powerset.

Improved Wikipedia Captions

Another one of Powerset’s nifty features is that it utilizes semantic technology in order to create improved Wikipedia captions for various articles. And, with the help of Powerset, Live Search will now be able to pull these improved captions into its search result pages that include Wikipedia results.

The Factz Engine

“Factz” from Powerset are concise representations of information that are taken from sentences using three parts; the subject, the relation, and the object. From those parts, a list containing related searches for a set of queries is generated. For example, a search for “chicken recipes” will generate the following list of “Related Searches”:

• Baked Chicken Recipes
• Oven Baked Chicken Recipes
• Easy Chicken Recipes
• Chicken Soup Recipes
• Low Fat Chicken Recipes
• Lemon Chicken Recipe
• Fried Chicken Recipes
• Chicken Pot Pie Recipe

These projects are currently being tested on a small, randomly selected audience, so any search at Live.com could potentially contain one of the above projects as a bonus tidbit of information. Microsoft and Powerset say that they will continue to work together to help improve each other, and I will be here to report the results back to you! So, until then!

In fact it wasn’t long ago that the word “google” was added to both the Oxford English Dictionary and the Merriam-Webster Collegiate Dictionary as a verb. Fearing the dilution of its brand and the potential loss of its trademark, Google resisted the use of the name as a verb, but to no avail.

While Google may have lost the name game, it’s definitely winning the search war. With its market share fast approaching 80% and paid search revenues that are truly mind boggling, I don’t believe there are too many people out there feeling sorry for Google. To the contrary, some would say that Google is in need of some real competition.

So where is this competition going to come from? What is it going to take for a competitor to make a stand against the search giant that is Google?

Cuil Hand Luke?

If you follow the search industry at all you’ve undoubtedly heard a lot about Cuil (pronounced “cool”) this past week. Entering the space with more fanfare than any new search engine deserves, Cuil is being billed by many as an engine that might eventually have the ability to compete with Google for market share.

While I do like Cuil’s interface, and I always try to cut new engines plenty of slack when they first roll out, I’ve not seen or read anything that convinces me of its ability to compete with Google in any meaningful way. Stay tuned to find out if I’m wrong but I think that we’ve gotten to a point where it’s going to take a lot more than a massive index and some big names to un-seed Google as the engine of choice for the masses.

The Merging of Microsoft & Yahoo

While I really don’t feel like rehashing this topic today, I’d be remiss not to at least mention Microsoft’s attempt to purchase Yahoo while posting about this topic. After all, isn’t it just as likely that Google’s competition will come from some well established players rather than a brand new engine? And isn’t the desire to compete with Google the main motivator for Microsoft to originally pursue this deal?

But even if you combine MSN, Live and Yahoo’s market share you only end up with around 17%. That’s quite a bit better than anyone else has been doing in quite some time but I doubt it’s the height of Microsoft’s aspirations.

Microsoft’s BrowseRank

Thinking beyond merger possibilities, Microsoft has developed a new method of evaluating web pages called BrowseRank. Separating itself from Google’s PageRank, the idea behind BrowseRank is that analyzing a page according to traffic and time spent on a page is a much better indicator of quality than a mathematical evaluation of links to a page.

I’m not going to hash out the process of computing page importance here as that would be an entire post in itself, but I do have to admit that the idea is intriguing to me. You can learn more about BrowseRank here (PDF).

Improving on Relevancy

So will Microsoft be able to provide meaningful competition to Google? Will Cuil be able to live up to the promise that it holds? Perhaps a better question is whether anyone can compete with Google at this point?

After all, Google didn’t get to where it is today by acquiring smart start ups or by raking in paid search revenue like nobody’s business. Google got to where it is today by providing a level of relevancy to search that had not been seen before.

As we instinctively align ourselves against the established power, we often times forget what brought Google to power in the first place. We did. And we did it in the name of relevancy.

Is there room today to improve upon the level of relevancy that Google has established?

The custom Live Search toolbar will be based on Microsoft’s cross-browser plug-in, Silverlight.

Distribution deals such as this are not uncommon. All of the major computer manufacturers are partners with one search engine or another. Dell is teamed up with Google and Acer is partners with Yahoo!. What is significant about this new Microsoft deal is the computer market share that HP has a firm hold on.

According to IDC, in the first quarter of 2008 Dell led the domestic market with 30.9% and HP trailed with 24.3%. Not surprising there. The interesting part of these statistics belongs to Acer, who deals with Yahoo! (Microsoft’s lost date at the search engine prom). Acer has only 8.7% of the market share, more than 15% behind HP!

If that wasn’t enough, Microsoft also has its foot in the door for international exposure with this deal. HP is the largest computer manufacturer internationally, beating out Dell by nearly 4%. The international distribution deal hasn’t happened yet or may never happen, but surely Microsoft will make a bid if it ever goes up for grabs.

This is an awesome example of Microsoft’s ability to get things their way, one way or another. Before this deal, Microsoft’s only distribution deal for Live Search was with Lenovo, which is barely on the domestic computer manufacturing radar. With this deal, I expect there will be a market share jump for Microsoft early next year.

Image: Hemicuda82

After having a nearly $47 billion offer rejected by Yahoo earlier this month, the software giant has launched Live Search cashback, a new initiative which will allow users of their search properties to get deals on products purchased.

Here’s how it works:

Users can search for products they’re looking to purchase at Live Search cashback, Microsoft’s new comparison shopping engine. When they do, they’ll be served relevant products from merchants participating in the program, which as of now includes Office Depot, Barnes & Noble, Home Depot and Sears, among others. Search results will outline the amount of cashback that users can receive for each product, which is expected to range anywhere from 2% to over 30%, depending on the product and retailer.

In addition to Live Search cashback, you’ll also be able to search for products using Live Search, Microsoft’s primary search portal. When using Live Search, certain products will be labeled with a distinct icon notifying users that they can receive cashback deals.

How is Microsoft offering these cashback deals?

The program stems from Microsoft’s purchase of Jellyfish.com last year, a cashback site that offers rebates to consumers for making purchases originating on their site.

Participating retailers will be paying Microsoft for each purchase made via their portals, which they will be splitting with the consumer. Rather than a cost-per-click model, advertisers will only pay Microsoft on a cost-per-acquisition basis.

This isn’t a new concept. Other, smaller engines have run similar programs in the past; however, given the prominence of Microsoft, along with the projected significance of the rebates that will be offered, this program has the potential to raise many more eyebrows and have users thinking twice as to where they’ll shop online.

Microsoft is working hard to develop new and extreme strategies (as in the case of the attempted Yahoo acquisition) in order to better compete with Google and secure a greater share of loyal users. Only time will tell if Live Search cashback is a success, but when you combine the company’s sheer determination with its virtually unlimited resources, these attempts certainly aren’t something to brush off.

According to the Live Search Blog, features of the new layout include:

• Search box near results
• Room to breathe on the page
• Crisp, clean type
• Intuitive video search
• Health results integrated from many sources

In my opinion, the design definitely has more of the Windows Vista flowing feel to it. I particularly like the hover-over preview function on the video search results. Also, I appreciate the footer link to the Webmaster Center of Live Search.

According to the Live Search Blog, the new design is the product of Microsoft’s “growing team of designers, researchers, and developers” who “think of design as being a critical part of a search product”.