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Friday, February 01, 2008

MicroHoo Better For Nearly Everyone

The Merger to end all mergers might come to pass. Microsoft's generous offer (62 percent premium) to buy Yahoo will certainly shake up the industry, and most likely for the better.

A strong competitor to Google will force the company to offer competitive advertising solutions and give advertisers a viable second choice to take their business. The reality is that if you want to grow your business through display advertising or search marketing, you need to be in bed with Google, and that's not healthy. Together, MicroHoo offers the audience that marketers need.

If you are a Yahoo shareholder you have to like the offer of being able to cash out or be a part of Microsoft's continually profitable stock program.

There will be many folks who cry that Microsoft will stifle Yahoo's innovation and continue its streak of ineptitude in online venture. Good! Because of its sheer size, MicroHoo will always breathe down Google neck, but it will never be savvy enough to become the Evil Empire online. Neither company has had a stellar track record of innovation in recent years in the Web 2.0 world, and that's less likely to happen in a combined effort. Microsoft's search function will benefit from Yahoo, while Yahoo's per user revenue would rise thanks to Microsoft's marketing clout.

Many Yahoo execs would likely jump ship, which would be sad for them, but engender innovation across the webisphere as they start their own companies or boost other rising stars. Again, good for the industry.

I prefer choice and healthy competition, but I'm not afraid of a Microsoft monopoly online unless Google completely loses their vision.

Finally, if this hostile bid fails, it puts Yahoo on notice that something radical has to be done for the company to please shareholders and to continue to be a leading force online. If the EU or DOJ doesn't let MicroHoo come to pass, we are no worse off than today.

By John Gartner at 08:14 AM | Comments (0)

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