Lawrence Gee | Marketing, Internet, Creativity, Strategy

And Then There Were Two? A Look at The Microyahoosoft

No, it will never really be called Microyahoosoft or Microsofthoo or even Yahoosoft but the proposed $44.6 billion bid by Microsoft for Yahoo! was definitely really big news last Friday.  It takes two huge Internet players and creates a beast of a company that just might have a chance at slowing down the Google machine.  So what’s the potential impact of such a merger?  Let’s take a look at some of the obvious and not so obvious synergies:

Search and Advertising Platforms

The most obvious outcome of the proposed merger would be to combine the #2 and #3 players in the U.S. Search Market.  According to a CNN article, Google holds approximately 58.4% of the U.S. search market, while Yahoo has 22.9% and Microsoft’s share is just 9.8%.  In terms of online display ads, combined Microsoft and Yahoo! would control around a 25% share.  This is big business especially since it’s projected that online advertising could reach $60 billion by 2010.  Both Microsoft and Yahoo! have been struggling to keep up with Google.  Both companies search marketing tools are inferior to Google’s on a variety of dimensions.  Combining forces could help both companies share existing research, development, and other resources. 

E-Mail and IM 

A Microsoft-Yahoo! marriage would combine to create a force in E-Mail and Instant Messaging.  Adding a strong Microsoft Hotmail to #1 Yahoo! Mail only creates an even more dominant player.  Combing both MSN Messenger and Yahoo! Messenger would allow more users to connect to one another.

Social Media

E-Mail and Instant Messaging creates instant networks that Microsoft-Yahoo! could tap into to use use to their advantage in the larger social network context. Also, a Microsoft-Yahoo! would have a much richer portfolio of web properties.  Combined you would have an interest in Facebook (which Microsoft has invested heavily in) and Yahoo! owned del.icio.us and Flickr.  Couldn’t you imagine a larger social network being developed that gets integrated with these web properties and overlayed by these e-mail and instant messaging networks? 

Mac vs. PC ads 

Yes,PC isn’t as cool as Mac.  But perhaps the proposed merger could give PC a flashy purple suit just as a shot of Yahoo! culture might be beneficial to Microsoft. 

All in all, just some food for thought.  We still have a bit of time to consider more effects of the proposed merger — if it does move forward, it probably won’t be finalized until the end of 2008.

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Is Social Network Advertising Special?

Lagging a bit behind rivals Google and Microsoft who already have advertising deals with Facebook and MySpace, Yahoo! just announced plans to sell ads on popular UK social networking site Bebo.  This marks the first time that Yahoo! has agreed to supply advertising for a social network. 

While these social networking sites offer tons of traffic (especially teenagers, college students, and young professionals), the bigger question remains if this type of traffic can translate into sales.  Typically these sites offer a location to keep up to date with friends, send short messages, and give the ability to share personal content such as photos and videos.  Are they there to purchase products or even learn more about them? Probably not.

Looking in the future for marketing on the web, I foresee today’s generation becoming increasingly numb to online advertising (especially banner and text ads).  But is this really any different from ”traditional” media like TV, radio, and print?  I feel that the same issue of consumer apathy applies to all.  In regards to social networking sites, marketers are trying many ideas from traditional display advertising to widgets to dedicated pages to elicit some form of response.  While the tools to reach our target market might be a little bit different, the challenge for us as marketers remains the same – how do we cut through the noise, engage customers, and make them care.

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Say Goodbye to the PC as We Know It

It’s interesting to think how quickly something can get replaced.  If you look over the past twenty years or so, there are many examples of dominant technology that quickly faded away due to an emerging one.

Think about typewriters and word processors and how the PC eliminated that industry. 

Think about VHS and Betamax video cassettes and now how DVDs have revolutionized home videos.

Think about how tape cassettes then CDs and now MP3s/iTunes have become the de facto music standard.

But what’s next?  Is there something that we take for granted that we use everyday that quickly might be eliminated?  A couple examples come to mind:

• Say goodbye to the PC, Microsoft Windows, and MS Office - Who needs to purchase an operating system and business tools if you can get the same functionality from online versions.  Could the future be a box or terminal that merely provides access to the web?  Google certainly sees this and thus is providing more and more online applications and storage.  The quality and functionality is getting quite good as well.  If you haven’t already, check out Google Docs & Spreadsheets and other similiar online programs — you’ll see why Microsoft is scared and falling behind.
• Landline telephones - It’s amazing how many people have cell phones today.   I remember in my undergraduate days, very few people had one.  If you did own one, they were quite bulky and expensive.  People bought them for emergencies and the convenience of not having to use a pay phone.  You never thought of not having a phone at home.  If you had asked someone to name companies that made telephones you’d get names like Panasonic, Uniden, GE, etc.  They had a stranglehold on the home phone.  Today with today’s youth, you’d be hardpressed to find aided brand recognition for these companies and phones.  In several more years will children even know what a landline is?

The key for companies today is to anticipate what might become and not be today blinded by today.  Look at the kings of industries that seemingly overnight get overthrown.  Look at history and the many examples of great leaders, dynasties, countries, etc. who lose it all because they ignore the signs.  Don’t forget that change is inevitable.

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