The rumors of Microsoft taking over Yahoo are rattling around the net and MSM again. (Though the NY Post is not my top read for tech analysis, let us say.) However, it's an excuse to muse on the possible fit. Clearly, there are some similarities:
- Both are losing search share to Google.
- Both have blown multiple search strategies
- Both have failed to retain users they might have gained via their control over net access via browser and device or broadband provider partnerships
So what's not to like??
Snark aside, there is a way of looking at such an alliance that reveals a logic beyond the usually failed strategy to merge two losers. Consider the graph just below that shows Microsoft with about a quarter of Google's search share. Then compare a recent release from the same data source - comScore - declaring that Google had just passed Microsoft in total traffic.
The only way these figures can both be true is if Microsoft's non-search traffic is three times larger than its search traffic, right? So looking at Microsoft solely as a search advertising venue is missing 75% of the point. Ditto a large amount of Yahoo's traffic is not search-derived. Perhaps better, then, that we look at both of them as now being primarily destination sites when considering the results of some form of merger. Don't look at this as a search play - consider it as an attempt to preemptively build the largest destination site advertising market out there. Seen in this light, the recent Yahoo - Comcast partnering makes more strategic sense.
Add up Yahoo, Microsoft, Comcast and roll in a some other large destination site partners, and you begin to get a reason why the advertisers would need a channel to their customers other than the search placement marketplace that Google is on the verge of dominating.
(I have no inside knowledge one way or another on any actual MSFT-YHOO discussions, so consider the above to be strategic speculation.)