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REDMOND, Wash. (AP) — Microsoft Corp. is making an unsolicited $44.6 billion offer for Yahoo Inc., the Internet icon and one the best known Web portals, in a move to boost its competitive edge against Google Inc. in the online services market.
The unexpected announcement Friday comes as Yahoo and Microsoft have fallen behind Google in the race to capture online advertising dollars. The deal could also give lift to the entire technology market.
The announcement sent Yahoo's share price up 54 percent in premarket trading, while Google fell 8 percent.
In a letter to Yahoo's board of directors, Microsoft Chief Executive Steve Ballmer said the company will bid $31 per share, representing a 62 percent premium to Yahoo's closing stock price Thursday.
Since reaching a 52-week high of $34.08 in October, Yahoo shares have fallen 46 percent. Yahoo climbed $10.27 to $29.45 in premarket trading.
Which, hopefully, could mean more money to us Adsense publishers, as Google starts to realize they need to be proactive in making publishers WANT to go to or stay with Adsense. That means better quality of advertisers and less smart-pricing.
I don't think Microsoft's acquisition of Yahoo (if it goes through) will have much effect on AdSense at all. It certainly won't force Google and its advertisers to pay more for traffic that doesn't convert. And let's face it: If there were an exodus from AdSense to Microsoft/Yahoo, it would most likely be an exodus by the publishers who aren't doing well with AdSense. This would have the effect of increasing the advertising "quality gap" between Google's audience and the Microsoft/Yahoo audience. Net result: Higher average eCPMs for AdSense, lower average eCPMs for Microsoft/Yahoo's publisher program (a.k.a. the ad network of last resort).
If there's any good news in Microsoft's willingness to pay $44.6 billion for Yahoo, it's the validation of online advertising as a medium with huge potential for growth.
proactive in making publishers WANT to go to or stay with Adsense
Publishers have wanted to go or stay with AdSense pretty much since day one of the program. While its hardly the perfect set-up for us publishers (nothings perfect, right?), why would G change something that's already been very successful for them, and shows little sense of trouble and no signs of decline?
When small publishers start switching to Yahoo in droves?
Q: Which small publishers would make the move?
A: The ones who aren't doing well with AdSense.
Result: AdSense would become more attractive to advertisers, and YPN would become less attractive, leading to an even greater gap between AdSense and YPN than there is now.
That was just silly.
"In the short run, a stronger Microsoft might force Google to lower the cut of revenue it takes from media companies when it places ads on their sites."
"Might" is the operative word. First, the deal has to be approved by the U.S. government and the EU. Then Microsoft/Yahoo will need to attract enough advertisers and publishers to reach critical mass--and that's tougher than it sounds, especially for contextual advertising programs like today's AdSense and YPN where inventory is needed for untold thousands of niches and subnichs.
It's also unlikely that Microsoft's goals are as simple as competing with Google for contextual text ads. Microsoft is almost certainly looking at the bigger picture, and especially at areas (such as display and "rich media" advertising) where Google isn't yet a major player.
In short, if you're hoping that a Microsoft/Yahoo deal will create a cornucopia of easy money for unhappy AdSense publishers, you're likely to be disappointed.
If the Yahoo/Microsoft deal goes through, one of the big winners will be Windows Mobile. Yahoo has some terrific mobile services, and combining their lineup with Microsoft's could create a combination that's unbeatable. None of the major mobile platforms have done a really good job of beautifully integrating a range of online services.
Search and advertising. Mobile-oriented search and advertising is still a nascent space, but Yahoo seems to be ahead here. In any case, this is a very unsettled area, and one where even if Microsoft and Yahoo merged, they'd have to be smart and aggressive to dominate – especially with Google Android coming.
MSN and Yahoo are competitive with Google in terms of gross traffic, but "search" is not their core business. I'm sure someone will pipe up and say "not me", but the fact is that they typically deliver somewhere less than 1/10 of the visitors that Google does.
I'd love to see a true competitor to Google appear, but the more success that Microsoft and Yahoo have in the battle against Google, the worse off most of us will be.
They may merge and become a good alternative just for Us publishers. What we are looking for is wether they are willing to consider international publishers.
Else the same nightmare will begin again. They will come up with some option just for US (Beta). We will see bunch of thread every week about "When it will open for International?" These therads will vanish over the period of time and then its all over for us.
Fade up of these speculation and now need to see something solid.
By the way my first langues is not english before anyone objects. SOmetimes I feel thats more important here rather than undderstanding the point behind the story.
Since last year, investors have called for Yahoo to abandon its own search advertising system, which generates significantly less ad revenue for each consumer search, and use ads from Google in return for a majority share of the revenue.
I certainly don't think this would be a good business move for anybody -- except maybe for the Yahoo board who would probably like to max out the short-term stock price to their own benefit.