The Google-Yahoo Pact FAQ: We Don't Set Prices; Why Yahoo Will Earn More
This story was written by David Kaplan.
As it tries to avoid a potential antitrust clampdown from the Justice Department over its search ad deal with Yahoo (NSDQ: YHOO), Google (NSDQ: GOOG) hopes it can ease advertisers' fears about the pact as well. In a post on the Google Public Policy blog, the company tries to make the case that the partnership won't result in higher pricesnecessarily, anyway. But Google certainly doesn't deny that some marketers will see higher charges. Excerpts from the Google-Yahoo ad FAQ are below:
-- Will the Google-Yahoo! agreement raise ad prices?: "Neither Google nor Yahoo! set ad prices. Ads are priced by an auction where an advertiser only bids what an ad is worth to them. Furthermore, ad price is only one part of the story. A more important measure for advertisers large and small is the return on investment of their advertising dollar." Translation: Many of you will see a price hike.
-- Yahoo! claims they will make an extra $800 million from this deal.: "Does that money come out of advertisers' pockets?" Short answer is no and yes. Yahoo will make more money because its ads will appear in places where they hadn't before. Plus, Google promises more relevant ads, which will cost advertisers more.
-- Does Google's quality score effectively raise prices for ads?: Google sidesteps this question, saying, "A quality score helps ensure that users see the most relevant ads not just the most expensive." Google is offering to clear up additional "misconceptions" about its relationship with Yahoo later today on its Public Policy blog.
By David Kaplan