Yahoo CEO Carol Bartz told the All Things D conference crowd she’d be happy to do a search deal with Microsoft CEO Steve Ballmer on three conditions: “If there’s boatloads of money, and there’s the right technology, and the information we would have to have, then yeah….it’s that simple.”
By “the right technology” and “the information we would have to have,” we think what Carol means is that in any search deal, Yahoo (YHOO) must be able to:
- Feed its display advertising buyers into the search buying process without Microsoft’s help.
- Gain access to all search activity on both Microsoft and Yahoo search entrances. This data helps Yahoo target its display ads to the right users.
- For good measure, Yahoo should be able to track how users interact with Microsoft’s Web properties — including its ads.
If Microsoft will agree to those terms, we think Bartz and Yahoo should do the deal for three reasons:
- Combining Yahoo’s bidders with Microsoft (MSFT) bidders for the same search keywords will drive up cost-per-click.
- Jefferies analyst Youssef Squali says outsourcing search infrastructure to Microsoft could save Yahoo $1 billion to $1.3 billion per year.
- Ad agencies tell us they don’t care if they buy search and display advertising from the same place.