Search Alliance – A genuine competitor to Google in EMEA becoming more distant

The rumours of the past few weeks of a delay in the official rollout of the Search Alliance in Europe, the Middle East and Africa (EMEA), have now been confirmed, meaning Yahoo! and Microsoft's Bing will continue to operate as separate platforms for the foreseeable future, all of 2011 at least.

But why the sudden change in strategy? Advertisers and Agencies were led to believe the Alliance would finally provide a credible alternative to Google, and sources had suggested the migration in the US, while not error free, was considered to be successful.

The issue, it would appear, points to the limitations of the Microsoft AdCentre platform's ability to deliver the additional click volumes the Alliance is apparently driving. Yahoo! management suggest that while advertisers are reporting improved ROI's and search efficiencies from the Alliance, the platform is simply not ready to deliver the revenue per share (RPS) it had anticipated.

Yahoo!'s hope from the partnership is that it brings about improved revenue per search numbers. Some studies have suggested advertisers could see cost per click (CPC) increase by up to 78% above Bing's current levels as competitors move to one combined platform with the Yahoo-Microsoft Search Alliance.   However according to Yahoo, it will take much longer to achieve RPS improvements.

"The good news is that many of our most important advertisers are realizing a much higher ROI on their campaign in the combined marketplace. We see major financial, auto, retail and customers spending multiples of what they spent with Yahoo! and Microsoft previously because returns have been great.

And some recent third-party reports have reinforced why we did the alliance in the first place. Advertisers CTR and ROI on Yahoo! has improved dramatically. This is good news for advertisers as they seek an alternative for their online search marketing spend.

On the downside, however, adCenter isn't yet producing the RPS we hoped for and are confident is possible. Advertisers are seeing strong ROI, but technical limitations in the current adCenter platform mean the click volume just isn't there yet. We had expected RPS to be neutral by midyear, it's now evident that it will take Microsoft longer to achieve that goal. We expect that to happen by year-end. In the meantime, the RPS guarantee helps protect our revenue and our view of the long-term potential of the marketplace remains unchanged."

The Alliance clearly has some benefits for both the advertiser and the consumer. However with this round of delays, coupled with some of the issues encountered in the US from the migration, the thought of having a genuine competitor to Google is just becoming more and more distant.

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