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Yahoo says no now, working feverishly to show value

February 11th, 2008 Posted in Yahoo Search Marketing

Although Yahoo has rejected a $31 per stock bid by Microsoft to buy the company, they had planned to inflate their true market value with surges of recent growth.  It’s an interesting story of two big names, but two small “Davids” in advertising compared to the “Goliath” that is Google.  Where is Google in all this?  Probably taking the advice of numerous industry insiders telling them to stay out of it.  Here’s why…

Google has long upheld the somewhat hypocritical oath of “do no evil” while slowly developing parallel technology and products to compete with their competitors.  It’s no surprise they don’t want anything to do with the Yahoo bid, they have nothing to gain.  Depending on what numbers you believe, they already own between 60-90% of the search market, and are not likely to be knocked off that podium anytime soon.

There were several warning signs investors in the Microsoft camp should have caught onto, and perhaps they did, when offering the $31 share price.  For one, Yahoo has made significant inroads in recent weeks to show the potential for profitability, including:

  • Mining their databases to contact potential big name pay-per-click spenders with proposals.
  • Setting the standard in web hosting by offering unlimited web space and unlimited bandwidth allocations.
  • Pushing their affiliate marketing campaigns hard.

Yahoo hopes all of these tactics result in a significant spike in revenue that will prompt investors to stay the course for a better offer.  Although a part of me does want to see “Microhoo” emerge from a deal, it likely won’t mean much to the online marketing industry as a whole.

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