Comments on: Yield Thoughts http://brontemedia.com/2005/12/12/yield-thoughts/ There are those who experiment and those who follow the formula Wed, 19 Nov 2008 23:24:41 +0000 http://wordpress.org/?v=2.5 By: Peter Hershberg http://brontemedia.com/2005/12/12/yield-thoughts/#comment-54 Peter Hershberg Tue, 13 Dec 2005 04:45:07 +0000 http://brontemedia.com/2005/12/12/yield-thoughts/#comment-54 I agree that MSN would have to be willing to take a loss to secure distribution across AOL, but I still think it would make sense for them to do so. Two points to note: 1) It might not take as long for MSN's CPC's to rise (close) to the level of Google as you might imagine. A possible AOL shift to MSN search could release the latent value of the AOL user base through the integration of MSN's demographic/behavioral targeting capabilities -- targeting that requires bids above and beyond what you're already paying for a click. The partners would reap incremental revenue from AOL's existing user base of 112MM unique visitors to its web properties. The pairing could ultimately create some of the most valuable traffic in the market - traffic that is free from the equivalent of spam sites. 2) AOL represented 10% of Google's overall revenue in the third quarter. Losing that could be a big hit to their financials. I agree that MSN would have to be willing to take a loss to secure distribution across AOL, but I still think it would make sense for them to do so. Two points to note:

1) It might not take as long for MSN’s CPC’s to rise (close) to the level of Google as you might imagine. A possible AOL shift to MSN search could release the latent value of the AOL user base through the integration of MSN’s demographic/behavioral targeting capabilities — targeting that requires bids above and beyond what you’re already paying for a click. The partners would reap incremental revenue from AOL’s existing user base of 112MM unique visitors to its web properties. The pairing could ultimately create some of the most valuable traffic in the market - traffic that is free from the equivalent of spam sites.

2) AOL represented 10% of Google’s overall revenue in the third quarter. Losing that could be a big hit to their financials.

]]> By: Mark Mannino http://brontemedia.com/2005/12/12/yield-thoughts/#comment-53 Mark Mannino Mon, 12 Dec 2005 23:51:56 +0000 http://brontemedia.com/2005/12/12/yield-thoughts/#comment-53 What if MSN viewed AOL as a loss-leader and AOL took a non-profit maximizing approach. AOL must look at Google now as what AOL was in the late 90's - they have a strangehold on the space. AOL can look to MSN as being a worthwhile investment in time and lost short term revenue in exchange for long term goal of a paid search industry with more than 2 big players. MSN also needs lots of high quality volume to get it's prices and back-end performance to compete with Google and Yahoo. So it may be worthwhile for it to lose money on AOL in the early stages. In the end, a short term revenue minimizing approach may be viewed by both as a the right path. What if MSN viewed AOL as a loss-leader and AOL took a non-profit maximizing approach.

AOL must look at Google now as what AOL was in the late 90’s - they have a strangehold on the space. AOL can look to MSN as being a worthwhile investment in time and lost short term revenue in exchange for long term goal of a paid search industry with more than 2 big players.

MSN also needs lots of high quality volume to get it’s prices and back-end performance to compete with Google and Yahoo. So it may be worthwhile for it to lose money on AOL in the early stages.

In the end, a short term revenue minimizing approach may be viewed by both as a the right path.

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