Searchers Gave Up on Yahoo after Yahoo Gave Up on Them

By Tad Miller | Dec 4, 2009
More Articles by Tad


At the end of this July, a death certificate was signed for a company.  That company was Yahoo.  It wasn’t heralded by Yahoo as being a death certificate, in fact the powers that be in charge of Yahoo proclaimed that it was a great deal.  The deal in which Bing.com essentially takes over natural and paid search for Yahoo, gives Yahoo 88% of the revenue of the PPC clicks derived from Yahoo.com.  It allows Yahoo to essentially shed hundreds of millions in technology and development costs (along with employee salaries and benefits).

Yahoo CEO, Carol Bartz had already made in known in the press that Yahoo wasn’t really a “search company” and never had been a search company (Huh?):

Yahoo, according to Ms. Bartz, simply feeds search results for people who have grown curious while reading one of its news stories or watching a video. It doesn’t generally pop into peoples’ minds as the first place to go look for answers during the course of their day-to-day activities.

As such, Ms. Bartz said she could continue to live with the 20 percent or so share of the search market Yahoo has today, calling it “a very viable number.” “It is very profitable,” she said, “and we would be happy all day long.”

The biggest thing for Yahoo is increasing the number of pages people consume and slapping as many display ads as possible across those pages. “My fortunes are tied to my pages,” Ms. Bartz said.

It’s very well documented that Yahoo obviously is and was a search engine, and Bartz was rightfully raked over the coals for trying to spin Yahoo’s declines.  Either way, the damage was done and Danny Sullivan wrote a marvelous eulogy proclaiming:

And then there were two.

Make no mistake, Yahoo’s out of the search game. I know the spin. Better user interface, new ways to innovate, a winning play. Let’s not kid ourselves. They’re done. Not today, not necessarily in a year, but down the line at some point. Done.

A company that had a Billion Dollar offer from the same suitor, MSN was now rented out to Bing with not even a dollar of cash upfront exchanged.  Some called it suicide:

The once proud warrior of the internet space laid down its sword,  knelt at the feet of Microsoft and gutted itself today. There was no honor in this death, it was one brought by the shame of losing to  Google and a lack of faith in one’s ability to compete in the space they created. To be clear, Yahoo didn’t need to do this deal,  Microsoft did. Ultimately Yahoo will look back at this moment as the second–and perhaps fatal–mistake in their epic history.

None of this is new news, so why am I bringing it up 4 months after the deal was signed?  We have seen That's right it's only this big now...dramatic downward shifts in both natural and paid search traffic on Yahoo since this deal was announced.  When comparing Yahoo natural search traffic from late July when the deal was announced to now, and looking at that same exact time period in 2008, we are seeing year over year drops of over 80% in search traffic. Let’s make this clear, these are major high traffic websites that are seeing hundreds of thousands fewer Yahoo searches than they received a year ago on Yahoo.

That 20% marketshare that Carol Bartz was so happy with is evaporating in our client’s analytics logs.  Hitwise says Yahoo is down to 16% share of search this month, we we are seeing it drop to as low as 13% in some instances for out clients.  Just to clarify, we are a search engine optimization company and there have NOT been drops in Yahoo search engine rankings for major keywords, in fact there are obviously improvements in rankings (we’re good!).

Similar drops in Yahoo PPC clicks have also been noticed, though not as dramatic.  We believe that Yahoo’s Search Network is propping up Yahoo PPC, unfortunately with mostly fraudulent parked domain traffic.  If Year over Year reporting for Yahoo.com traffic was available in Yahoo’s ad delivery report we believe that the losses of PPC traffic would be much more evident.

The reality is that Yahoo (or Bartz) believes they can do “addition by subtraction”.  The 88% of ad revenues is a very significant percentage to be getting from the Bing deal, but the Yahoo brand has been irreparably damaged by this deal.  Searchers are abandoning Yahoo in droves and the reality is that most of them are going to Google and not Bing.

Microsoft desired the traffic that Yahoo has (had), but that traffic is disappearing, and a great deal of it’s Yahoo Search Network traffic will be going away in the first quarter of 2010, when Yahoo will allow advertisers to opt out of all Non-Yahoo Search Network Partner traffic as part of a settlement of a click fraud class action lawsuit:

As part of the settlement, Yahoo must create a new “Premium” ad placement option that will only show ads on Yahoo-owned web sites and other select parts of the content distribution network. This specifically excludes parked domain names

Clicks originating from Yahoo.com for your website will continue to diminish going forward, and there’s nothing Bing can do to prevent that.  The damage is already done.

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