An Open Letter to Jerry Yang and Steve Ballmer

8 comments

Dear Jerry and Steve,

I’m writing on behalf of the tens of thousands of people who make their living as search engine marketing professionals. The potential of a Microsoft acquisition of Yahoo would no doubt have a major impact on my life and so many others’ and I want to give you a few ideas on how you should move forward once (if?) the acquisition is finalized.

First off, let me just say that the combination of Microsoft and Yahoo will no doubt motivate search marketers to spend more time optimizing your properties than they currently do. This is a classic case of the sum of the whole being greater than the individual parts (known in German as “gestalt”). It’s currently not worth spending 5% of my time to optimize Microsoft and 5% on Yahoo, but if I can spend 10% of my time to optimize across both networks at once, that makes sense. So expect me and other SEMers to increase our keywords, ad text, and overall spend once the acquisition is approved.

That’s the good news. But now let me tell the potentially bad news. I’m sure that there are many engineers and product managers at both of your companies who are very proud of the tools and user interfaces that currently exist within Microsoft AdCenter and Yahoo Search Marketing. Many of these people will no doubt advocate strongly for their tools to remain active after the acquisition, at the expense of the other company’s tools. In other words, Yahoo engineers will argue for YSM tools, and MSN engineers will argue for AdCenter tools.

Lets be really clear and a little bit crass about both YSM and AdCenter: both suck. I mean this in a relative sense – relative to Google AdWords. AdWords is at least 10 times easier, more powerful, and faster than either YSM or AdCenter. I appreciate the effort both of your companies have undertaken to build your own platforms, but at this point it’s time to just admit that your tools aren’t up to snuff. Any attempt to combine the best of YSM and AdCenter is a mistake. You should either ask Google if you can license their technology, or just outright copy it ASAP.

Here’s a historical analogy that might help you understand what I’m saying. Prior to World War II, the Polish cavalry was renown for their skill and bravery. In September 1939, the German army invaded – with tanks and airplanes. Despite the skill of the Polish cavalry, they were no match for the Germans and were quickly destroyed. You guys are like two commanders of cavalry – even if you choose your absolute best riders (tools) on the best horses (UI), you have no chance against even the most inept tank unit.

So is AdWords the best UI ever? No, of course not. But it’s far and away the best SEM interface out there today – by leaps and bounds. I’m sure it will hurt to admit defeat in this respect, but I guarantee you that the financial rewards will be well worth it. I can’t tell you how many SEMers I talk to who wish they could spend more money on your platforms, but either don’t understand how to use your systems, or have gotten so frustrated that they’ve just given up.

If you are a glass half-full person, this is actually really good news. Think about it: this acquisition is an opportunity to start anew. You can bulldozer through all the corporate politics and do something that will be a financial windfall. This acquisition will look like the greatest thing since, well, AdWords! Combine the added incentive of managing both Yahoo and Microsoft in one interface with a new interface that makes you competitive against AdWords and you’ve created a real powerhouse.

For the record, I’ve sat through a lot of focus groups with your companies over the last eight years. And every time anyone asks me for my opinion about a user interface or tool, I always look straight into the double mirror and say (very slowly): “C-o-p-y A-d-W-o-r-d-s.” I’m sure I’ve annoyed a lot of your usability people with this statement, but the truth often hurts. In any event, best of luck with the acquisition – feel free to drop me a line if I wasn’t clear on anything in this letter!

F4E,

David

About the Author

David Rodnitzky is CEO of PPC Associates, a leading SEM agency based in Silicon Valley. PPC Associates provides search, social, and display advertising management to growing, savvy companies. To learn more, visit ppcassociates.com, or contact David at david@ppcassociates.com.

Add Your Comments

  • (will not be published)

8 Comments

  1. True. True. True. One exception - ask users how to make it better than Adwords.

  2. David, you've said what I've been thinking for years. Let's hope they actually listen to their customers. According to Hitwise, In Feb 2008, Yahoo and MSN have around 28% of the search market, compared to Google's 66%. Yet I spend 95% of my PPC ad budget with AdWords, and only 5% with Yahoo & MSN. If they follow your suggestions, they could increase their PPC revenue by 700% in no time at all. I mean, how can Yahoo call themselves a tech company when they make you open a new account and set up new campaigns for each country you want to advertise in. How archaic is that? And their shareholders wonder why Operation Panama didn't live up to expectations. Duh!

  3. Michael and Chris, thanks for the support. For the record, Michael, I am a Yahoo shareholder - maybe part of the reason I have held on to my shares for so long is the hope that they will find religion and switch to Google - either as a total outsource solution or just their tech and UI!

  4. David, I'm sure Yahoo (and MSN) can create user friendly interfaces as good as Google's if they stood back a bit and really looked at how their customers are (or rather aren't) using their products. The question is... would they put their egos aside for the greater cause? These companies are spending millions (billions?) on R&D. Where is all that money going? It certainly doesn't look like it's going towards improving one of their largest revenue generators.

  5. All Yahoo and MSN really have to do is improve their client centers and capabilities, at the moment theyre nothing compared to Adwords.

  6. Right, so here in Holland we don't even have an AdCentre, MS is still using the Yahoo! system on their Dutch sites. Even tough, the marketshare of both together is somewere between 5 and 10%... No wonder there are more and more rumours that Yahoo! want's to withdraw from Holland and other countries in Europe. I Fully agree with the statements in this article.

  7. You're spot on David. Search is all about distribution so a Microsoft/Yahoo deal makes sense both for advertisers and for the companies. I see this deal as very positive all around. One of the risks I see is that while Microsoft recognizes that their interface sucks, I'm not so sure they recognise that Yahoo's does, or that Yahoo recognizes it themselves yet. Both of these giants have a history of developing large code bloated programs and systems that get in the way of their success. They also have a pattern of stubbornly holding on to products/systems way past their shelf life and spending way more in time, money and resources than they should on constantly tweaking something that was second rate to start with. My biggest concern with a merger is that both of these businesses have a history of over thinking and over analyzing themselves into oblivion. As Google as proven so well - This is business model that sells itself. Just give advertisers/agencies the right tools and get the heck out of the way.

  8. If there is a merger of Microsoft and Yahoo there will most likely be a combining of the properties and systems especially to integrate all the other advertising related companies that Microsoft has been buying. It's their only chance to gain market share. Google is going to keep marching ahead with advertising on search, radio, media, mobile and everything else that displays an ad. I think both Microsoft and Yahoo are painfully aware that their respective ad systems are not what the market wants. Personally I believe the deal will happen in the next two weeks, befor Yahoo is faced with reporting dismal earnings on April 15th. Until a deal happens Yahoo's share price will continue to tick down. I am definitely ready for a combined MicroHoo! ad platform.