Microsoft Begins Yahoo Search Ad Integration

Microsoft says it should be ready to handle all of Yahoo's search ad business for the upcoming -- and always crucial -- fourth-quarter shopping period.

The company announced today that all Yahoo advertisers could now begin transitioning their ad campaign management to adCenter, the advertising platform Microsoft uses for its fledgling search engine Bing. Earlier this month, Microsoft began handling all of Yahoo's organic search traffic.

The integration news has been long anticipated, ever since the companies announced an elaborate search partnership in July 2009. That pact gained regulatory approval this past February.

The timing of this process is crucial, as search advertisers and agencies expect integration to take some time to ramp up from a logistical perspective, along with some initial marketplace volatility because many advertisers do not currently use both Microsoft and Yahoo's search engines.

Agencies had been anxiously awaiting this decision, hoping to get this transition out of the way before the fourth quarter began. Some speculated that Microsoft might delay the move until next year, fearing that the holiday shopping season would be too dangerous to put at risk.

Microsoft says that the transition should be complete by the end of October. If not, the company says it will delay the integration until next year. "We still may consider holding off on the full integration of paid search until 2011 if we feel that the transition will in any way impact
the holiday season," wrote David Pann, general manager for Microsoft's search network, in a blog post on Tuesday.

Prior to that October end date, brands will have the option to maintain two separate ad accounts for their paid search campaigns: one via adCenter and one via Yahoo's search platform.

Once adCenter takes over all of Yahoo's paid search business, Microsoft will be able to claim to manage somewhere between 26 percent and 31 percent of the market. That's crucial, according to Microsoft search officials, since adCenter's ability to improve its ad quality and relevance is directly correlated to the number of search queries the platform handles. In other words, the thinking for Microsoft is that more searches will lead to better ads, which will lead to more revenue.