Google Is Offloading Its Most Disliked Advertisers Onto Yahoo

marissa mayer hand upYahoo CEO Marissa Meyer

A policy change at Google and a new search deal signed by Yahoo! show that the former has offloaded one of its least-liked advertising clients onto the latter.

In December, Yahoo signed AVG Technologies as a new search client. AVG offers antivirus software that comes bundled with a “secure search” web browsing product.

Anyone who downloads AVG’s antivirus software is encouraged to allow AVG’s search toolbar to download with it by default. When users search within the AVG toolbar, the company splits the revenues from any ads that are shown or get clicked on. Until December, AVG split all that revenue with Google.

The problem is that people seem to really dislike AVG’s search toolbar. A writer at ZDNet called it “the worst foistware I’ve ever seen,” because it’s difficult to remove once installed. The toolbar comes as a default with any AVG download, users have to positively opt out of it if they don’t want it. Even if users try to uninstall the AVG toolbar, the default option in the uninstall menu is to leave AVG installed but “hidden” in your system settings:

AVG / Seeking AlphaUsers of Yahoo’s Answers service regard AVG as “malware.” One writes:

I got this AVG nightmare after installing Firefox . I wasted 4 hours of my life trying to disable it. I did a regedit, and removed it from my system, and it still hijacked my internet explorer.After countless hours, and support from the entire internet community, i was able to disable it from hijacking my browser, but could not remove it.somehow, the avg search engine remove button is disabled.I can remove anything but I can’t remove the Avg search engine WTF???

AVG tells us:

AVG works with several search providers and maintains good relationships with all of them. This includes Google.  On the customer side, there is choice in the download process and we offer clear communications throughout. We also take customer feedback into account whenever possible. Overall, our search business is healthy.

PC users have long been familiar with software downloads that come loaded with default toolbars, search engines, and other unwanted stuff that changes system and browser settings. After Google received 100,000 complaints in a 90-day period about such downloads, it adopted a new policy a couple of days ago. Now, software downloads that use Google search (as AVG once did) must obey these new rules:

  • Be pre-approved by Google;
  • Offer one-click, complete uninstall;
  • Provide clear, full disclosure and transparency to people about what is being installed and what changes are being made to their devices;
  • Install itself on only one browser per download;
  • Be bundled with and distributed by only reputable parties who comply with our policies.

Seeking Alpha writer Eiad Asbahi believes AVG saw this change coming, changed the terms of its agreement with Google to allow it to use other search partners, and then signed with Yahoo. “We believe this partnership was formed in desperation and anticipation of imminent Google toolbar policy updates,” he writes. He’s shorting AVG stock because Yahoo’s search business is smaller than Google’s and because Google offers better revenue split terms than other search engines.

The Yahoo deal was greeted with joy by Oppenheimer analysts Jason Helfstein and Jed Kelly hailed the deal as a victory for Google that would bring in more than $200 million in new revenue per year from download business fleeing Google, according to a note seen by Business Insider. Here’s their estimated revenue chart for Yahoo based on gains such as the AVG switch following Google’s toolbar policy changes:

Yahoo Oppenheimer

Yahoo, of course, needs the money. Its total search revenues sank 10% to $425 million in Q1 2013 (although after traffic acquisition costs it was up 6% to $409 million).

We asked Yahoo for comment but have not yet heard back; Google declined to comment.

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