As part of the transition, search advertisers that are still on Yahoo’s platform in those countries will need to migrate to adCenter because Yahoo Search Marketing accounts will shift to read-only status. But, in a blog post today about the pending change, Microsoft suggests monitoring both accounts during the transition:

As Yahoo! ad serving moves to adCenter, and your clicks and impressions in that account begin to increase, you’ll see a corresponding decrease in clicks and impressions in your Yahoo! Search Marketing account. It is thus important to continue managing your campaigns across both platforms throughout this transition phase, in order to avoid missing out on any potential clicks.

The transition is expected to begin “as early as” January April 18th and be complete by the end of the month. [Ed. note: Apologies for the typo there on the month!]

Microsoft says the transition is coming later this year to Germany, Austria and Switzerland.

The Ballmer 70/15/15 Challenge

“I would issue you all a kind of challenge to try any search you want on Bing and Google,” Ballmer said, explaining that 70% of the time, there won’t be any difference in the results, that 15% of the time, Bing will be better and 15% of the time, Google will be better.

Now, if Ballmer had said that maybe 20% of the time Bing would be better, that would have given it perhaps some advantage over Google. But saying your product is exactly the same as someone else’s isn’t a real incentive, much less a ringing endorsement.

Ballmer did allude to there being things beyond the search results, such user interface differences. But he didn’t stress these as huge, major reasons to change.

Bing: “Getting Stronger”

Asked how Bing is doing versus three years ago, when Battelle last spoke with Ballmer at Web 2.0 about the service, Ballmer said “it’s getting stronger every day” and noted that Bing’s share had risen from 7% to 15%, which was “a nice rise.”

“We went from the number three player to the number two player,” Ballmer continued, explaining that when Bing’s share is combined with that of Yahoo, which Bing provides with results, the two have a 25% to 30% share of the search market in the US.

Ballmer added that beyond market share, the Microsoft-Yahoo alliance is important for “providing enough data to improve the product.”

Ballmer On Yahoo

Was Ballmer happy the plans for Microsoft to buy Yahoo in 2008 for $44-45 billion didn’t go through? “Times change, times change,” he laughed, adding later, “You get lucky sometimes.”

Ballmer went on to say that Yahoo was a great partner, with a huge audience and lots of good things about it, which is why the alliance with Yahoo is important.

Indeed, so important that Microsoft is providing revenue guarantees for an additional year than was originally agreed, to make up for poor monetization that’s plagued the partnership, news that came out during Yahoo’s earning call a few hours before Ballmer’s talk.

No Microsoft+ Coming

In other questions, Ballmer declined to say if Microsoft would launch a social network to rival the likes of Facebook, instead pointing to things like Xbox Live and Windows Live as examples of how Microsoft has “picked its play” in the social space.

Siri Nice; Android Phones Are For Computer Scientists

As for mobile, Ballmer said “there’s certainly some nice things Apple has done with Siri” in terms of its voice recognition and lookup but suggested that Windows Phone and Bing would build on Microsoft’s long-standing previous work in the space and be better.

On Google and mobile, Ballmer got perhaps his biggest laugh of the interview:

“You don’t need to be a computer scientist to use a Windows Phone, but I think you do to use an Android phone.”

First, the links

The best thing I can do for you is to first point you to the various public repositories of information as published by Yahoo and Microsoft. First and foremost, Yahoo has set up a Transition Center to guide small- and large-size advertisers, publishers, and technology partners to provide useful information.

New items keep popping up here, so make sure to come back more often as the transition gets closer. For example, Yahoo just added a page on upcoming editorial guidelines. There is also more general, press-oriented information available at www.SearchAlliance.com. In similar style with a bit more detail is the YSM Blog. I’m also going to make reference to Yahoo Site Explorer and Bing Webmaster Center, both of which SEOs and webmasters should be getting to know if they haven’t already.

Timelines

Yahoo has shared that we’re going to begin live testing of both organic and paid listings (showing search listings from the Microsoft platform on Yahoo Search) this month. Barry Schwartz posted here on July 16 noting the email sent to advertisers. The idea as I understand it is to test the integration points for both organic and paid results, and if all goes well we could see a transition of organic (“algo”) listings in the August/September timeframe, with the paid transition right on its heels.

The goal is to migrate all paid advertisers to adCenter by October 15. The key here is quality. Yahoo and Microsoft have been very clear that only if we can ensure a high-quality experience for users, advertisers and publishers will we hold to this timeline.

Publishers and domain match

The publisher story is fairly straightforward. Yahoo is trying to set the transition up so that it’s seamless for publishers. Publishers of paid listings will ideally make the same calls for ads, which will be translated and returned with adCenter results, and likewise publishers of organic listings will make their same calls, which will then be translated and returned with Bing results. Same with domainers (come on, cybersquatters, stand up and be counted!). The domain match feed mechanics should remain unchanged, only the content of the feed itself will change.

Optimizing for the alliance

The good news is that most people who optimize for natural search don’t have to change tactics drastically, because most folks don’t differentiate too much between the engines when optimizing for natural search. When Bing launched, there was some talk in the industry about how Bing put more weight toward internal links than did the other engines. But as time has passed, the engines have generally converged in the factors they deem important, so optimizing for Bing instead of Yahoo Search, for example, isn’t much different. The thing that’s changing is that SEOs are now having to shift more of their attention to Bing, now that it will be powering a significantly larger share of search listings than before. But rather than changing the way SEOs optimize based on this market shift, we’re seeing them simply devote more resources to the newest of the three engines.

In most cases, this means first introducing yourself to the Bing Webmaster Center. First you’ll need a Windows Live ID, so if you don’t already have one, go ahead and sign up. The tricky part about using the webmaster center, for large websites, anyway, is the authentication process. The way Bing tries to ensure that the rightful webmaster is in charge of the Bing Webmaster Center account is to require a piece of code (xml or metatag) to be placed on the website. If you’re the webmaster for a small or medium-sized site this is fairly straightforward. However, as we know, larger websites sometimes don’t have webmasters per se, so this isn’t so easy. Especially if your homepage is one of the busiest pages on the Internet, you may have some difficulty putting a line of xml in the root folder or even placing a metatag on page header. What this really means is that if you haven’t gotten started on this process yet, you need to do it—and do it now. Bing does a decent job of telling you which method to use based on your access to the code—basically go for a metatag unless you can write to the root folder.

Once you’re authenticated, the Bing toolset can help you set up sitemaps, track inlinks and indexation, crawl errors and the rest of the standard stuff that webmaster tools are supposed to offer. You’ll want to use the Bing tools to track these metrics separately from Google because Bing will now contribute potentially around a third of all your seo traffic, through both Microsoft and Yahoo sites. Look at the Bing Webmaster Center Blog for updates and information.

Compare your data

When I talk to SEOs about the transition, the topic that always comes up is Yahoo! Site Explorer. This tool has long been regarded as an authoritative (and accurate) measure of inlinks/backlinks. What some people don’t realize is that Bing has a similar feature called “Backlink tool.” Look for it in the Bing Webmaster Center. My recommendation is to dig into both so you can compare data and features between the two tools.

Now for the paid stuff

With paid search, the Search Alliance will create a unified marketplace based off of the adCenter platform. Most advertisers I’ve talked to have much less experience using adCenter than Google AdWords or Yahoo Search Marketing (YSM or “panama”), so this is a potentially significant change for many advertisers. In the unified marketplace, advertisers will manage their campaigns using the adCenter tools, and in doing so we’ll get our ads distributed on both Microsoft and Yahoo, as well as their respective affiliate sites.

This is a major shift in paid search buying for most of us, who currently manage YSM separately from adCenter. As this transition takes place, all advertisers will be migrated to this model, so get used to the idea that your Yahoo traffic will be coming through your adCenter buy.

I think the important thing to consider first in planning for this transition is a review of your current adCenter accounts and campaigns. If you’re like me, you probably have one or more adCenter accounts that were set up some time ago, and they’re providing decent ROI at a relatively low volume. If that’s the case, you probably haven’t put an overwhelming amount of work or attention into these accounts. That has to change immediately. It’s time to dig into those accounts and ask yourself some important questions about how you want to manage your own transition.

Self-service or managed?

One of the first things you’ll want to clarify for yourself in the paid search transition is who is going to be managing what. The guideline is that if you currently have a YSM account manager, you will be serviced post-transition (account management, sales, invoicing) by Yahoo. However, if you’re a self-service advertiser, you’ll be serviced by Microsoft. Now, there are a few edge cases here where you might have an adCenter rep, but not a YSM rep or vice versa. If that’s the case I recommend contacting whichever account manager you do have, with the goal of having a Yahoo account manager in a post-transition world.

Account transition

The key to your success in managing the transition is to understand what your accounts look like relative to the way they should look, and putting in the work early enough to be prepared once the transition takes place. If you’re going to create new accounts, you have the choice of building from scratch or trying to repurpose either your AdWords or YSM accounts. In many cases the best option will be to start from scratch. While this sounds like a lot of work, odds are it will provide the best chance of success. From what I know so far, best practices on adCenter aren’t so different from AdWords or YSM, but experience tells me to start with a clean slate. If you’re a large advertiser you’ve probably launched quite a few keywords, ad groups and campaigns on either YSM or AdWords that didn’t amount to anything, so replicating this cruft on adCenter probably isn’t the best of ideas. My recommendation is to leverage your experience in prioritizing your work.

If you’re a small or medium size advertiser this prospect isn’t so daunting. It’s much easier to start off with a tidy account structure if you only sell a few products or have a limited universe of viable keywords to consider. Start with your head keywords, and organize them in a way that suits the adCenter structure. Then move down to the body. The tail? If you’ve already optimized everything else and the volume warrants it, sure.

For large advertisers, you’ll want to rely on your own paid search experience as well as the recommendations from your YSM and Microsoft account managers as you think about account structure. I’ll give you an example of how we’re looking at the situation. In one of our larger SEM programs we promote our shopping site. We’re looking at mapping products and categories in the following way: Top-level product category, e.g. electronics, corresponds to an adCenter account. Secondary product category, e.g. television, corresponds to a campaign, and tertiary category, e.g. Samsung 3D tv at the ad group level. That’s just one way to slice it. Obviously, depending on how you advertise, you may have a different view on it.

A thought on keywords

Everyone who’s ever done any amount of search marketing knows that AdWords and YSM have a very different notion of what a keyword is (and is not). I won’t go on and on about this, except to say that adCenter also has its own ideas. My experience tells me that adCenter’s system of keyword normalization is closer to AdWords than it is YSM. This would lead some advertisers to simply port their AdWords accounts over to adCenter. Again, I recommend putting in the work and re-creating from scratch. But hey, that’s just one guy’s opinion.

That’s un-American

Just a quick note on geo-targeting. Just as YSM and adCenter don’t have the same notion of a keyword, they also have different definitions of North America. In YSM-ese, North America means USA and English speaking Canada. French Canada is a separate buy. AdCenter looks at it differently. My understanding is that adCenter separates the US and Canada by targeting, and doesn’t differentiate on language. So that means that in AdCenter you should have English and French keywords in your Canada account, and (American) English and maybe Spanish keywords in your US account.

Wow, that’s a lot to digest. And, there’s going to be more. If you don’t have a YSM rep, take another pass at the resources at the top of this post. Check them early and often. Again, if you have YSM reps, send them something nice and ask for their time, assistance and expertise. They’ve all been trained on Bing at this point so they should be able to help. There will be much more detail coming out in the next few weeks about how to set yourself up for success in the unified marketplace, and with any luck you’ll be hearing more from me on this topic in the near future. Until then, happy searching!

On the organic side, Yahoo began testing Bing powered results. They are currently testing Bing powered results on about 25 percent of the traffic. They hope to transition over to Bing fully, sometime in September or October. That is, of course, if their tests go well.

On the paid side, Yahoo is currently testing Bing powered ads, adCenter ads, on about 3.5% of the search queries. Yahoo has provided a detailed PDF document detailing the difference between the Yahoo and Microsoft adCenter platforms. It is critical for Yahoo to communicate these difference to their current advertisers, in order for there to be a smooth transition.

Key Differences Between Platforms:

• Distribution tactic is done on the ad group level with adCenter, but account level with Yahoo
• Microsoft will enable the same domain blocking capabilities by the time Yahoo is transitioned over
• Microsoft offers more match types than Yahoo does, giving more control to advertisers.
• Geo-targeting techniques is currently less sophisticated on Microsoft’s side
• Microsoft will add more “excluded keywords” to adCenter, matching Yahoo’s current limits
• Microsoft’s keyword mapping is more normalized, so you will likely need to add more keywords to your adCenter campaigns, but it does give you more control
• Ad title copy length is 25 characters on adCenter, from 40 characters on Yahoo. Make sure to shorten your titles.
• Minimum bids are 5 cents on Microsoft and 1 cent on Yahoo.
• Rich Ads are not available on Microsoft, but will be coming to Microsoft adCenter in the future

Timelines:

Between August and October, Yahoo’s representatives will reach out, discussing how Yahoo will be handling and transitioning accounts from Yahoo to adCenter. Yahoo will be handling all account management, so your reps may not change. Between August and September, advertisers will login to their accounts to pick the transition type. During that time frame, they will also sign any new IOs that are necessary. In late September, Yahoo will begin transitioning over the accounts to adCenter.

Three Transition Options:

(1) Keep your existing adCenter account and augment that

(2) Create a new adCenter account and import your 3rd party (i.e. Google) structure

(3) Create a new adCenter account and import your Yahoo! structure

For more information, see the YSM blog and the transition center.

Mark Morrissey, Senior Vice President of Product Management at Yahoo, told me that while only 3.5% of the paid ads are being powered by Bing in their tests, up to 25% of the organic results can be powered by Bing. Yes, up to 25% of the time you go to Yahoo and conduct a search, it can be a Bing powered set of search results.

How would you know? You won’t necessarily see a “powered by Bing” on all the test results. Mark said that some of the test results will have the powered by on them, so Yahoo can test them with and without. But ultimately, when the switch over happens, all Yahoo Search results will be powered by Bing and contain the “powered by Bing” badge on the bottom of the page.

You can also check and compare Bing search results to Yahoo, to see if they match. Outside of that and maybe seeing a Bing logo, you wouldn’t know if Bing is powering Yahoo on your search results. But you do have up to a 25% shot at seeing real live Bing results on Yahoo.

The final transition date is still on target for the month of September or October.

As an extension to adCenter search and Shopping listings, Bing Cashback held far-reaching promises of increased scale and brand enhancement for advertisers. It provided a unique lever of control for search marketers unlike any other demand generation vehicle, allowing advertisers to be more competitive in the Bing search landscape. And it complimented search well.

Unbeknownst to Bing advertisers, the Cashback program faced challenges at Microsoft. Notably, the Cashback business model was not profitable. According to sources at Microsoft, an advertiser would have had to spend up to four-fold of its pre-Cashback spend for Microsoft to simply retain its search revenue. While there may have been some exceptions during seasonal times, most advertisers fell far from the profitability mark.

Then factor in the huge business development funds pumped into the program in 2009 as well as hundreds of temporary support staff and it quickly becomes apparent just how costly Cashback proved to be. To justify these costs, the increased query share would need to be significant—and it wasn’t.

The program’s adoption also proved to be slow—particularly among larger advertisers—mostly due to its technical complexity. It was easier for smaller advertisers with setting up pixel-based reporting, yet the prospect of potentially limited gain in scale did not readily compel action. Nevertheless, the Cashback Specialist Sales team succeeded in acquiring thousands of advertisers. During this process, they strengthened Microsoft’s relationship with agencies and advertisers as they worked to guide all advertisers through the often arduous on-boarding process. They deserve to be recognized for their efforts.

More importantly, as Microsoft found in its program analysis, Bing Cashback did not play out to its expectations. Bing’s query share may have increased, but could not be directly attributed to Cashback. According to sources at Microsoft, Cashback had been effective at drawing a comparison shopping audience, however, not the loyal general-searcher base that it sought. Furthermore, rejection of the program by Yahoo in the upcoming Microsoft/Yahoo Search Alliance was also a blow. Either way, the program was deemed ineffective.

On June 4th, 2010, all Bing Cashback advertisers and customers were simultaneously informed that the program would be discontinued after July 30th. Unlike usual Microsoft practices, little information was provided. From an advertiser perspective, the announcement came as a shock, particularly for those businesses that invested extensive time and resources into the program. Why would Microsoft pull the plug on this so suddenly? Imagine if your business had just signed up for the program. For agencies, the abandonment strains hard-earned trust and will cast doubt on participating in future Microsoft “beta” programs. From a customer perspective, the initial announcement appeared overly negative and may arguably have kept customers from continuing to use Cashback until its end. Some retailers may have even seen decreased Bing revenue relative to their rebate incentives.

With two weeks remaining until Bing Cashback’s end, actively participating advertisers must know that any unspent funds in their reward pool will stay in Microsoft’s coffers. That doesn’t have to happen. Now is the time to use your reward pool savings to get as much out of the program as possible! By now, most Cashback advertisers should have a good idea of their rates of reward accrual and depletion by testing varying rates of Cashback rebate elasticity.

The key to depleting your piggybank quickly is simple—limit your accrual (the 75% of spend contributed to your reward pool) and maximize your depletion (depending upon rebate rate). Contrary to earlier practice of using Cashback to increase new customer acquisition off generic keyword-targeted campaigns, you will now need to remove your least efficient, highest spending campaigns from Cashback (revert to standard search) to reduce your accrual.

Next, determine an appropriately higher Cashback reward rate and apply this to your most efficient campaigns (i.e. branded). If you are unwilling to remove generic campaigns from Cashback (or looking to deplete your reward pool for Bing Cashback for Shopping), the alternative is to naturally increase your Cashback reward to a rate high enough to ensure account-wide depletion. The net outcome of these actions will allow advertisers to transition into August and leave as much of the reward pool paid out to loyal customers instead of Microsoft.

In retrospect, for the short time that we used Bing Cashback, it was an exciting and worth-while opportunity for early adopting advertisers and agencies alike. Given the arguably fewer innovative advertising products (i.e. Yahoo feed-based Submit programs, including Yahoo Search Submit Pro) at search marketer’s disposal, Microsoft’s abandonment of Cashback’s is certainly a disappointment. Nevertheless, hope remains that new tools and innovative features will emerge, especially as competition mounts between Google and a combined Microsoft and Yahoo search program. We may not have Bing Cashback, but perhaps Microsoft could grace its partners with the opportunity of something better?

Yahoo confirmed they are testing Bing powered results “offline,” which we already know. But today, I believe for the first time, Yahoo has confirmed they will be testing Bing powered results in the live search results. The email wrote:

Though much of our testing is already happening offline, this month we’ll also test the delivery of organic and paid search results provided by Microsoft on live Yahoo! traffic.

This month, Yahoo will begin testing search results, both paid and organic, on live Yahoo Search queries. Yahoo said the “testing volumes will fluctuate during this period” and they will make sure to keep “paid search volume in particular kept low,” as to not impact advertisers.

So keep your eyes open for Bing search results on Yahoo as soon as today.

The switch over will be sometime in August or September, and possibly later, if the testing does not go well.

Yahoo played up the importance of this change saying that according to comScore, Bing will ultimately power 30% of the search queries globally on both paid and organic search.

Here is a picture of the full email:

Both Microsoft and Yahoo have been unusually coy. Most advertisers and agencies might find that their sales teams have tried to provide as much information as possible to set appropriate expectations, yet even they aren’t privy to details known only to a select few. While the joint effort to purposely over-communicate is clear, greater transparency would be helpful. And if agencies are truly partners to Microsoft and Yahoo in this transition, then the added information should in turn help provide them with the feedback needed to be successful.

Not surprisingly, many questions remain. So, what should you be prepared for?

There is no early adopter advantage. You might have heard already that all phases of the transition will impact advertisers universally and simultaneously. No advertiser will have a lead advantage. Assuming that each phase is executed smoothly, Yahoo search could be entirely powered by Bing as early as September, which leaves little time for delays especially if the transition needs to be complete before the holidays. On the contrary, if delays push the transition into October, the two engines could opt to postpone further development to Spring 2011. Will Yahoo—and more importantly Microsoft—be ready?

Microsoft still has work to do. As of late June, Microsoft announced the first of two preparatory adCenter enhancements for the transition. Advertisers will see new performance and editorial dashboards. Integral to the transition is an enhanced import process as well. While helpful, these features should have rolled out ages ago. All search marketers will agree that Microsoft’s second enhancement must improve negative keyword usability and allow advertisers to exclude search partners. Adopting Yahoo’s domain blocking tool will suffice. Microsoft should take note of Yahoo’s painful lesson from expanding its search network with low quality partners and unraveling its keyword match driver. Assuming that Microsoft does not provide this feature in the second enhancement, advertisers would be wise to pay close attention to referral traffic sources as soon as Bing syndicates a larger share of Yahoo Search traffic.

Competition among advertisers will increase. More importantly, once Yahoo search is fully syndicated into MSN adCenter, advertisers should brace for a potential CPC increase. The economics are simple: as both networks converge, a combined Microsoft and Yahoo search marketplace will drive a substantial number of new advertisers to Microsoft and—to a lesser extent—Yahoo. The result of this will be an increase in competition on the SERP. In a Quality Score world, this translates to increased bid pressure and effectively higher CPCs.

Using a competitive keyword report from AdGooroo, I looked at three verticals of key interest to our clients. I examined a few competitive generic terms that drive the greatest traffic and spend. The AdGooroo report identified all advertisers targeting the selected terms by search engine. Accounting for a converged marketplace, the Yahoo and Bing lists were cross-checked for new unique advertisers respectively. Under “Advertiser Base Change,” the resulting increase in advertisers for each network is listed. Based on a weighted average accounting for the variance in scale between the search networks as well as the anticipated spending capacity of the new advertisers, the resulting bid pressure was estimated. Given some inaccuracies in identifying “new” advertisers by AdGooroo and considerations for advertiser size, the estimated bid pressure impact has been manually adjusted.

We can fairly accurately conclude that some verticals will be impacted more than others. A liberal assessment based on this limited sample might hold that CPC could increase from 20% to 40%. The onset of higher costs may not occur immediately as some advertisers may respond slowly to the transition. A few may even sit out until “the dust settles.”

It’s not all gloom and doom. We should also consider some of the opportunities that will emerge from the Microsoft and Yahoo search alliance. Let’s not forget that we will be abandoning the inefficiencies of Yahoo Panama’s loathed keyword match driver. At last, advertisers will be able to truly target a keyword by “exact match” without the worry for the ever-problematic canonical duplicates. Overall, there will certainly be an efficiency gain for all experienced advertisers that can effectively leverage MSN adCenter’s features to their advantage. Smaller, potentially less savvy advertisers will benefit from additional distribution. Conversely, some larger advertisers may lose some their competitive advantage over small advertisers through greater ease of targeting and optimization on MSN adCenter.

Assuming the marketplace stabilizes after a few months, the net result of increased competition and gained efficiency probably won’t cancel each other out. Across the industry, it may be safe for advertisers to account for something in the area of net 5% to 15% higher CPC, though advertisers would be best to determine impact to their own business. While still uncertain, it’s best to take a cautionary and reactive approach. Good advice may be to blend historical Yahoo and MSN performance reports to establish a baseline for what is to come.

The alliance has had a negative impact on innovation. Over the course of the last year since Microsoft and Yahoo agreed to the search alliance, the industry has faced a few disappointments. First, Yahoo disbanded all feed-based “submit” programs in January 2010. Yahoo’s abandonment of Search Submit Pro brought an end to paid inclusion, which constituted a philosophical shift to what most might interpret to appease Microsoft. Secondly, Microsoft hastily announced in early June 2010 that Bing Cashback would be discontinued, which ended what most advertisers see as a valuable acquisition and loyalty program. Couldn’t Microsoft have tweaked the Cashback business model to put the program on track? This cut and run strategy risks undermining trust as well as treasured relations between these publishers and their trusted advertisers and agencies. I believe that what we’ve already seen is the negative impact of the search alliance on innovation. Is this really how “Microhoo” will challenge Google? Hopefully not.

To be fair to Microsoft and Yahoo business interests, the alliance could allow both publishers to focus more on their key strengths. Yahoo would disband development on its “Panama” platform and save on exorbitant engineering costs. Yahoo could focus more on developing content for its portal. Microsoft would be able to support potentially thousands of new advertisers with an arguably better advertising platform and countless years of customer support experience.

As disruptive as the Microsoft—Yahoo search alliance may seem, it constitutes an unprecedented and admittedly exciting step in search marketing. How the end user perceives a revamped Yahoo search and empowered Bing search engine will determine whether Google’s market dominance can truly be challenged. It leaves me to wonder: how well will Yahoo users receive the simplified form of Bing search results? Will Yahoo be able to effectively brand itself in search?

The lack of choice for users may not be apparent at first glance. Unlike for users, the alliance eliminates a more tangible “choice” for marketers who could benefit in the long-term with a single, formidable platform and more effective tools to rival Google AdWords.

Many of you probably remember that Yahoo was the king of keyword research tools. Everyone used the Overture keyword tool, which lived at http://inventory.overture.com/. Yahoo, after acquiring Overture, slowly been killing this popular tool and finally laid it to rest two years ago today.

It was a sad day when the tool went offline, it was likely an early sign of Yahoo giving up on search and focusing on other things. And now, the Style Guide just adds more salt to the SEM’s wounds.

I remember SEMs and SEOs virtually crying over the decade and downfall of the Overture Keyword Tool. Again, that tool was the number one source for keyword research for most SEMs back a few years ago – and it died.

So if you are looking for good keyword tools, don’t look at Yahoo. Didn’t they build a new keyword research tool within the Yahoo Search Marketing (YSM) portal? Yes, but don’t forget, YSM is being killed soon also – Bing’s adCenter will replace it completely. So why not commend some of Microsoft’s tools from adLabs? I don’t know. Instead, Yahoo can’t recommends Google, and a bunch of third-party sites and tools.

The U.S. Federal Trade Commission staff is urging the filing of an antitrust suit challenging Google Inc.’s $750 million acquisition of AdMob Inc., according to three people familiar with the matter. It will be up to the five-member commission to decide whether to follow the staff’s advice or approve the deal. The people familiar with the matter spoke on condition of anonymity. Peter Kaplan, an FTC spokesman, declined to comment.

The FTC staff signaled last month it was leaning toward urging a court challenge when it was disclosed the agency was seeking sworn declarations from Google’s competitors and advertisers.

Google PR has been periodically sending bloggers and analysts material critical of that position. A post from mobile app developer Wertago is the latest in that series: “Ignorance and Hubris at the FTC…” It details the company’s interaction with FTC staffers and critiques their apparent lack of knowledge and expertise around questions of mobile advertising and competition:

There is no way the FTC knows enough to support a decision to block the deal. The staff members we spoke to were not particularly knowledgeable about the mobile ad space they are considering interfering in, or about the technology sector more generally, or about mobile app development and monetization, or about the changes in the mobile advertising sector in the past year, or about the level of competition and pace of change and innovation in the market, however broadly or narrowly you define it. More generally, it seems obvious to us that the computer, web, and mobile technology sectors are so competitive and fast-moving that NO ONE has the knowledge, expertise, economic insight, or clairvoyance to say with much confidence precisely what effect the AdMob acquisition will have on competition in the market or on consumer welfare. We think a recommendation to block the acquisition would be a mistake.

Among scores of others I also spoke to the FTC. I have not talked about it because I was not really supposed to. But the post above and the prospect of the FTC’s action cause me want to make a few comments about that experience and my impressions.

My sense from the questions I heard and their underlying assumptions is that the FTC was inclined to block the deal from the start. I say that carefully; I don’t think the investigation has been a sham but my sense is that the bias was always against the deal.

The attorney I spoke to was a very intelligent person but had a limited understanding of the mobile advertising market — at best. I spent a total of about three hours over two conversations trying to help explain and describe the companies operating in the mobile advertising space and the highly dynamic nature of the market.

This is a summary of what I said about Google to the FTC:

The company will have a number of advantages if the AdMob deal goes through. And AdMob unquestionably makes Google more competitive in mobile display and in-app advertising. It also puts Google in a stronger “holistic” position than Yahoo or Microsoft in mobile, partly because Google has moved faster and done a better job of executing vs. its main rivals.

I said however that I didn’t believe competition would be affected adversely and that advertising prices were not likely to go up. Indeed, mobile CPM prices have been falling in mobile. In short I said, yes Google becomes more powerful and effective but the deal doesn’t stifle competition. The market is dynamic and highly competitive, I told the FTC.

There were also some other things that I won’t go into, in my interactions with the FTC, leading me to believe the agency wanted to block the Google-AdMob deal. Again, I don’t think the investigation was a sham or pretense but I think the FTC point of view going in was a too-simplistic one: Google is overly powerful online and we don’t want that to extend to this important new arena as well. I think that turns out to be basically the “Alpha and Omega” here.

The FTC is certainly not alone. There are many critics out there who agree with that viewpoint and want to see Google “reigned in” in one or more ways. Yes, Google is powerful. And as an abstract matter too much power or control isn’t a good thing.

I’m no laissez-faire capitalist but I think the mobile ad market is both very young and highly dynamic. It’s evolving quickly and definitely very competitive. If the objective of anti-trust law is to protect competition in the market then it is simply unnecessary for the FTC to intervene at this stage by blocking the AdMob deal.

It is similarly unnecessary for the FTC to investigate Apple around its developer rules. Apple and the iPhone are far from a monopoly in mobile. The idea that the FTC is going to try and get involved in the debate over what software tools third party developers can or should be able to use is kind of absurd. The FTC wants to protect and promote Flash?

Apple’s rules and restrictions may cause developers to spend more time with other mobile operating systems such as Android, for example. Apple might hang itself by being too controlling. But the market is in a position to make that determination better than the lawyers at the FTC. Again it’s much too early for any regulatory intervention. Apple doesn’t have a smartphone monopoly (or even the majority share); it has a very strong product and platform that lots of people want to develop for. But there are multiple platforms out there and plenty of competition: Symbian, RIM, Android, Windows Mobile, WebOS, Meego, Bada and so on.

Let the market and the competitive dynamics of the marketplace do their job at this stage.

I’d much rather have the good folks at the FTC pay attention to things like the United-Continental merger and other potential consolidation in the airline industry. Ticket prices are high and getting higher it would appear. Combinations and acquisitions in that sector pose real risks to competition and ultimately to consumer prices.

Mobile advertising, by contrast, is a new and highly dynamic industry with intense competition. It’s literally evolving on a monthly basis. I would challenge the FTC and anyone to find a market more competitive.

Postscript From Danny Sullivan: I’ll also add something I shared on a publisher’s mailing list yesterday.

The last time the FTC acted against Google to “protect” competition, it was to suggest that if Google moved ahead with a deal to provide search results to Yahoo in 2008, it would face an anti-trust complaint. Google quickly backed down.

Google’s proposal would have left Yahoo with its own search technology. All along, Google’s argument had been that its move was intended to help a competitor stay a competitor in the space. Crazy? In Google’s view, it’s a better company if it faces competitors. They ensure Google stays on its toes. Unsaid is that they also help ensure Google can point to a healthy competitive market and say “look, no need to regulate us here!” In addition, having two weak competitors (Yahoo and Microsoft) might be better than a single one that potentially grows stronger (Microsoft).

Still, Yahoo would have kept its search tech and stayed a search player. In contrast, Microsoft also wanted a deal with Microsoft, to buy its technology outright. That deal would have been worth at least $9 billion.

After the FTC’s action to preserve competition, suddenly, Yahoo was no longer so valuable. It didn’t have Google that it could play against any Microsoft offer, no were there any other companies stepping forward to match the rich offers that both Google and Microsoft had put on the table. As I read it, the FTC effectively undermined Yahoo’s value, pretty much gift-wrapping the company for Microsoft.

A year later, with a leadership change at Yahoo, Microsoft came back with a new deal proposal. It still wanted Yahoo’s search technology, but it would no longer buy $8 billion in stock nor pay $1 billion in cash for it. Instead, it would simply allow Yahoo to keep 88% of sales form search ads on Yahoo’s site. Here’s the side-by-side of the two deals.

Only one thing had changed to produce this firesale price. Google was no longer allowed to compete for Yahoo’s business. As a result, the marketplace appears to have gotten less competitive, not more. Microsoft offered far less for Yahoo’s assets than a year before. In addition, Yahoo effectively signaled it would no longer be in the search game. Yes, the spin remains that Yahoo will still be a major search player, that it doesn’t need to own its own search tech, etc. etc.

A Search Eulogy For Yahoo article from last year debunks this from my experience in watching the same. Perhaps I’ll be proven wrong. But so far, since the launch of Microsoft’s Bing, all we’ve seen according to comScore figures is Bing taking share away from Yahoo. The deal’s not even in place, and Yahoo’s dropping. It’s hard to imagine that it’s going to recover, especially after it sells its technology.

So the FTC might block a Google purchase of AdMob? All that leaves me with is the idea that Apple might get the same gift-wrapped present — plus a feel a little sorry for any start-up that may be looking for a payday by being purchased by Google. The more it is prevented from buying, the more its competitors are likely to be handed bargain gifts.