With the recent announcement of a close partnership between Internet giants Yahoo! and eBay, it is easy to assume that mega deals from fellow Internet giants Google and Microsoft will soon follow. Google's clearly dominant position within the search market will diminish to only marginal leadership. Once Yahoo! becomes eBay’s exclusive provider of graphical ads and provides search results on eBay’s search page, Google will find competition hard on its heels. And Microsoft, sitting a distant third, must now find some way to compete with the Big Two.
The pressure has been on Google to keep its lead, so I think we will see it continue to target video as the new evolution of search. Either the company will make a pact to distribute video ads to another large network of sites, or else will start displaying them on Google's own search results page. Although smaller in scope than the Yahoo!-eBay deal, Google just recently struck a pretty big deal to integrate Google Desktop and Toolbar on new Dell PCs.
While Google still remains firmly in the lead, Microsoft now needs to increase its share of the market. While having missed out big time with Dell, Microsoft did recently introduce its own proprietary PPC system, which has produced much lower costs per click than the company's competitors, but has also proven to be somewhat buggy. Still, some sort of distribution deal centered around the upcoming Windows Live, Microsoft’s new portal/destination site, is probably forthcoming. And we might see Microsoft strike up similar deals with other PC makers such as Compaq, Acer, et al. Also, both Google and Microsoft will undoubtedly look to shore up their search technology through smaller partnerships or buy-outs.
Ultimately, I believe, this deal will lead to lower search advertising costs on all the search engines because of the myriad sources that will now become available. It means that even more Internet marketing firms will service these sources. And, finally, it’ll bring down Internet marketing costs for all types of businesses, large and small.
Think this is wishful thinking? Could be. Theoretically, higher supply means less demand, and that is exactly what I can envision happening as Google and Microsoft counterattack.
Greg DiFalco is a Search Engine Strategist with Prime Visibility.