Yahoo-Bing Search Alliance: 3 Key Findings All Search Marketers Must Know

With the transition to the Search Alliance beginning this past October, North American advertisers witnessed first-hand the migration of Yahoo search sponsored listings to the Microsoft adCenter platform.

Now, with nearly a third of the search query market, U.S. advertisers have new reasons to consider investing in Yahoo and Bing. Based on increased efficiencies alone, the Search Alliance has made managing across the two search networks much less time consuming.

But the more important question for advertisers is: how are paid search ads performing in the new combined marketplace? Marin Software set out to study the impacts of the transition to help advertisers make informed decisions about investing in the Search Alliance.

This wide-reaching study of paid search campaigns included data from more than 800 advertisers including Macy’s, University of Phoenix, Kayak, Salesforce.com, Hawaiian Airlines, and other well-known brands and agencies, which in total spend over $1.8 billion annually on paid search. The findings were surprising.

Here are three findings from Marin Software’s research that every search marketer should know about the combined Search Alliance market. By understanding the state of paid search performance on this channel, you can make more informed decisions about how to allocate spend in the U.S as well as how to anticipate future changes as the Search Alliance is rolled out internationally.

1. Search Alliance Gains Ground on Google

Post transition, the Search Alliance gained some ground on Google in paid search. Specifically, the Search Alliance increased its combined share of paid search clicks by 2 percent, to 21 percent of the total.

For marketers, these increases in volume translate into more than just increased opportunity. Because the combined platform now represents a significant share of clicks, marketers can expect more consistency in terms of keyword performance. This makes it easier to focus on optimization, rather dealing with issues where keyword data is sparse or shows erratic results.

2. Improved ROAS

Increased conversion rates and lower costs-per-click (CPCs) relative to benchmarks delivered improved return on advertising spend (ROAS) for advertisers following the transition.Excluding the impact of seasonality, conversion rates for Search Alliance advertisers increased by 12 percent relative to Google during the study period (August to December 2010). CPCs, on the other hand, declined by 20 percent relative to Google.

For marketers, this dynamic creates a favorable environment for search marketing investment.

3. Getting in Early is to Your Advantage

In addition to benefiting advertisers, the Search Alliance also has considerable upside potential for both Yahoo and Microsoft. As of December 2010, the Search Alliance was delivering 21 percent of paid search clicks, but only capturing 18 percent of the corresponding ad spend in North America. That means the Search Alliance has the potential to capture an additional 3 percent in advertising spend share if CPCs were to rise.

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