Yahoo May Outsource Pay-Per-Click to Google
Wednesday, April 9th, 2008
If expanded, deal would hurt domainers.
Yahoo (NASDAQ: YHOO) has started a test with Google (NASDAQ: GOOG) to determine if it can make more money using Google’s ad feed than its own, reports Wall Street Journal.
The deal involves 3% of search queries on Yahoo’s site, which will show Google Adsense for Search ads instead of Yahoo’s own search ads. Yahoo is trying to show that it has greater revenue potential that Microsoft (NASDAQ: MSFT) gives it. Essentially, Yahoo is saying that Google ads deliver more revenue per click than its own:
Analysts have predicted outsourcing its search ads to Google would boost Yahoo’s cash flow, since Google’s system generates significantly more revenue for each search query than Yahoo does.
This is ironic given that Yahoo’s search platform it based on the pioneer of pay-per-click search, GoTo.
If Yahoo were to expand this and completely outsource ad serving to Google it would cripple the domain industry. Already, the industry only has two major companies to work with for domain parking. Many major parking companies including Parked.com, Skenzo, and Name Media’s parking platforms use a Yahoo advertising feed.
This could merely be a simple test for Yahoo to show its earnings potential and irk Microsoft. Let’s hope so.