Microsoft got out the the moneybox this week with a bold AUD 50 billion bid for advertising giant Yahoo. What this means for the Australian market is anyone’s guess but as Wired Magazines report “Do Two Losers Make a Winner?” is probably bang on in relation to search and advertising. Yahoo are aligned with Channel 7 and Domain whilst Microsoft are aligned with Nine and MyHome.
This will basically leave two companies slugging it out for search advertising, but for me the race has ended for now and it will take someone new and something innovative to topple Google.
3 Comments
Nick
Peter I agreed initially to this view… Yahoo sucks, MSN Search sucks…
Sucks x Sucks != $40billion.
However if you look at the situation from a wider and more far-reaching strategic view this is a critically important move for Microsoft. Search advertising revenue has absolutely 0% to do with Microsoft
Glenn Batten
Google does not want this to proceed but because of US antitrust legistlation that has caused Microsoft so mych heatache over the years, Google cannot provide an alternative offer.
I am a Google advocate but they are just as interested in profit as anybody. Thankfully their business model is not as aggressive as Microsofts and is all about innovation rather than accumulation. Most people think that Google is a search engine company. That is just not the case. Google if first and foremost an advertising company. Their search engine solutions is just a vehicle for their advertising.
Google is clearly not happy about the Microsoft and Yahoo situation and Google’s Eric Schmidt has called Yahoo
Nick
As a public company, Google does now have increased responsibility to be profitable but I still believe their culture, in stark contrast to Microsoft’s is to create innovative concepts first, consider profitizing them second, which is why they insist their engineers spend 20% of work time freely researching and creating their own new ideas.
The fact that behind every search on Google a real-time auction is taking place between paying listers is the most brillient business model I could ever imagine. It’s interesting to consider how well this model could be adapted to property websites.
Imagine if instead of RealEstate.com.au just selling ‘Platinum’ memberships to agents till all agents had one… then ‘Double Platinum’… and so on… each agency could set a marketing budget on each property they listed which displayed it above lesser bidders for a given search criteria. Agents could no longer complain of listing costs, as these would float at real market prices.
This strategy, in my opinion, would maximise profit by floating at the supply vs demand equalibrium for each featured listing, relivent to it’s individual circumstances (eg: Agents in Wadonga would spend less to list than agents on Sydney’s North Shore)… it would also allow agents to pass such marketing costs on to their vendors, competitively driving up the cost of Featured Listings while also reducing the agent’s direct cost of subscription to REA. It would also be an excellent preemptive move, I believe, for REA to reposition its pricing model against Google should they begin seriously persuing the Australian real estate air space (As Google would pressumably be using this pricing model).