The acquisition could mean a lot. Or maybe not.
I had a conversation with myself this morning about Microsoft’s (MSFT) proposed buyout of Yahoo (YHOO). It went something like this:
Me: So, Andrew, what do you think this deal will mean for domainers?
Myself: Tough call. From a search perspective, this is #3 taking over #2. It will be interesting to see how they merge the two company’s pay-per-click platforms.
Me: Yeah, both platforms lag Google Adwords. Yahoo’s Panama platform has been a failure, but it has some stat and tracking features you won’t find in Microsoft AdCenter.
Myself: Hopefully they combine the best of both worlds. From an advertiser’s perspective, there will only be two platforms to worry about rather than three. Microsoft has been a blessing, though: it’s clicks are cheap and convert much better than Google and Yahoo.
Me: In theory, bid prices could go up as there isn’t much choice in tier-1 pay-per-click.
Myself: That would be good for domainers on Yahoo’s feed.
Me: But I guess you wouldn’t be able to do Microsoft-to-Yahoo click arbitrage on Parked.com anymore?
Myself: True, but Microsoft polices that pretty well anyway. The real arbitrage opportunity on Parked is from Google.
Me: That’s true.
Myself: The first question is how long this deal will take to come together. First, Yahoo has to accept the offer. Second, there will be a big anti-trust battle that will have to clear not only U.S. regulators but the EU.
Me: We’re talking about months, if not next year. Just look at how long it took Google to get approval for DoubleClick. Have they even cleared all of the hurdles yet?
Myself: The scary thing is that parking companies that use a Yahoo feed will now have to negotiate with Microsoft. It means new relationships with a company that has a reputation for being tough negotiators.
Me: But Microsoft is now humble in search. It’s buying Yahoo to compete with Google because it has failed. Microsoft has entered into very aggressive ad contracts to take business away from Google. Perhaps it will offer an even higher revenue share to keep companies on Yahoo’s feed.
Myself: Maybe. I wonder if domain parking companies have change-of-control provisions in their parking contracts. It might be a way for Google to bid for more business.
Me: Bidding and competition is good. But keep in mind that if Microsoft remained separate from Yahoo, Microsoft would eventually push headlong into the domain name parking market. That would introduce a third viable player, which would keep the others honest.
Myself: I’m going to stop thinking about this and go check my parking stats.
Me: Me too.
What do you think?