The recent agreement between Microsoft and Yahoo, in which Bing will provide the search results on Yahoo for the next 10 years (if the deal gets regulatory approval), has created quite a buzz in the SEM community. There are many mixed views, but most seem to like the idea that this should at least present Google with more competition. Since competition breeds innovation, the end result could be improvements for search advertisers, such as better tools, interfaces, and perhaps even prices. But what will the impact be on prices, and therefore ROI?
The convenience of a single interface for both Yahoo and Bing is likely bring in more advertisers. Despite AdCenter’s reputation for delivering a higher ROI than Google, many have found it brings in too little volume to be worth the effort.  But once there is a joint interface, that will no longer be the case. Those advertising on Yahoo will most likely be automatically transferred over to the new platform, so it will become very easy (and possibly necessary) for them to advertise on Bing. So Bing not only gets all the current Yahoo advertisers, they should get and influx of new advertisers who may not be current Yahoo advertisers, but are willing to try the new interface because they cannot ignore the close to 30% market share that Yahoo & Bing will have combined. So my guess is that many advertisers who have enjoyed a high ROI on Microsoft will start to see more ads competing with them for their keywords, and CPC will go up and ROI down.
The impact on Yahoo should be similar, with an increase in CPC, but to less an of extent than on Bing. Yahoo already has a lot more advertisers than Bing, so the impact of a few more advertisers should, in general, have less of an effect on prices.  How the results from Bing look on the page could have an impact, but it is difficult to predict what that will be, so we will have to wait and see.
Aside from my concern about a rise in CPC, I look forward to the new joint advertiser platform, even though it is probably close to two years away and still has to pass anti-trust scrutiny. I am impressed with what Microsoft has done with Bing, and if they take the best of adCenter and Yahoo and add in a few new improvements and tools, it could prove to be a productive and efficient way to reach the 30% of search that anyone who is just using Google is missing.
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