Google’s increasing dominance in the search marketplace is leading industry competitors to take new steps to preserve their market share and profits. In October, Search Alliance – the result of a partnership between Microsoft and Yahoo – will result in changes in the online search marketplace.  In studying this new alliance, research shop GroupM predicts that marketers will face initial confusion and higher long-term expense for cost-per-clicks (CPC).

Previously, marketers made their bids for keywords separately on Yahoo and on Bing.  When the new alliance becomes effective, GroupM analysts believe that the same number of marketers will be bidding for keywords in only one marketplace. As a result, costs may increase as follows:

  • Brand keywords (competitive increase for) 75%
  • Unbranded keywords (competitive increase for ) 73%
  • Branded keywords  – new competitors face CPC increase of 6.8%
  • Unbranded keywords – new competitors face CPC increase of 1.5%

GroupM analysts say that the October confusion and higher prices will lead marketers directly into the heated holiday season. These higher online search marketing expenses may not level out until early 2011 when a “true natural level” may be achieved. Marketers wanting to cover all their bases in online search marketing can look forward to an expensive and confusing fall as the new alliance takes effect.

[Source: Financial Implications of the Yahoo and Microsoft Search Alliance. GroupM Search Predictive Insights. September. 2010. Web. 8 Oct. 2010]