USA Today broke the news that Yahoo and eBay have formed an advertising alliance.
The basics are that Yahoo will be the exclusive provider of third party display ads to eBay, while also committing to accept (eBay-owned) PayPal payments for Yahoo services. With eBay as the 9th most visited site, Yahoo gains a huge number of additional page views to serve its ads to.
One of the more interesting aspects of the announcement is the comment that the two companies intend to jointly explore “click-to-call” technologies on their respective websites. Click-to-call technology has begun to take hold for certain buyers’ guides and directories, led by companies such as Ingenio and eStara.
Click-to-call technology can help close the loop between buyers and sellers, turning leads into transactions. It will be interesting to see how these two leaders utilize click-to-call to offer new solutions to internet advertisers.
As I’ve indicated in the past, while Google gets most of the attention in the world of search, Yahoo’s diverse revenue base creates many more lucrative opportunities. While Google’s growth is tied to the number of searches users do (and the ratio of searches to ad clicks), Yahoo’s model lets them monetize general Internet traffic more effectively.
UPDATE: Rafat Ali provides a summary of analyst feedback to the alliance. All fairly bullish on the partnership. Mark May of Needham does a better job than I do of outlining the strengths of Yahoo's diversified businesses: "We believe this deal also highlights YHOO strengths over GOOG and MSFT in certain important areas: 1) leading graphical advertising capabilities, to enhance EBAY’s revenue streams (MSFT is also strong, GOOG in development); 2) strong search market share, to enable EBAY to generate more traffic (GOOG strong; MSFT in development); and 3) a number of premium services and e-commerce properties, in order to power PayPal (GOOG and MSFT both lack scale here)."
It will be interesting to see if Yahoo! and eBay use their existing assets (Skype perhaps?) to deliver this new click to call service, or if they'll partner with a company, like eStara or Igenio, that specializes in this sort of connection between buyers and sellers.
If they use Skype, will that require advertisers AND consumers to download their software before a call can be connected? Seems like a lot of hoops to jump through. Why not just dial a number?
Posted by: Robert Yorke | May 25, 2006 at 01:51 PM