ADOTAS – The search-ad deal that Google and Yahoo have been touting may result in a serious price increase for interactive advertisers – a jump of more than 20%. News like this is never good, but the timing is especially bad for online advertisers who are hoping to lure brands from the more expensive and less trackable traditional advertising outlets.
SearchIgnite released the report warning of the increase yesterday. The report found that Yahoo keyword prices could go up by an average of 22% if it gives Google the sale of commonly searched for words/phrases to Google. (The Internet pioneer has said it wanted to use the partnership to boost its long-tail terms).
“The deal is clearly financially beneficial for both Yahoo and Google, however, advertisers need to be aware of the potentially significant impact to their search marketing efforts,” Roger Barnette, SearchIgnite president, said in a statement. “Most marketers will see their overall costs for search advertising across the Yahoo network increase, and will need to adjust their search strategies accordingly.”
The dour economic climate isn’t the only concern of course: many observers are concerned about the deal harming competition, which would drive up prices even more.
Yesterday, Google and Yahoo defended their deal, this time to lawmakers on Capitol Hill. Both companies said they would compete with each other and that their partnership would not in fact result in increased prices because advertisers decide how much they want to bid for keywords at auctions.
Microsoft also showed up, arguing that the partnership would be anti-competitive, giving the companies control of 90% of the paid search industry.