Yahoo! Should NOT Be For Sale

Interesting post today on GigaOM: Who should buy Yahoo? Handicapping 5 likely suitors. Nobody should buy Yahoo!, though. A merger makes no sense when being nimble is what's necessary to compete with Google. However, I think a joint venture with Microsoft might work. (BTW, these are the 2 things I think Yahoo! should do right now, before considering mergers or partnerships.) In order to keep up with Google, it might even make sense for Yahoo! and Microsoft to spin off their search advertising properties and merge those entities into a new firm. Following the web 2.0 naming conventions (tongue-in-cheek), they should create this new search company:

Yeah, that's Overture sans vowels. ;-)

Or maybe take the generic domain name route and buy something like the search.com domain. I'm serious, though, about a new company that combines the best of Yahoo! Search Marketing and Microsoft adCenter, both in terms of technology and people. Treat it like a startup, with venture capital from both Yahoo! and Microsoft. The problem with both Yahoo! Search Marketing and Microsoft adCenter is that while they both have decent advertising platforms, they're still not as good as Google AdWords. More importantly, they don't have sufficient ad distribution, both in terms of quantity and quality. Even if they had a better solution than AdWords, it wouldn't matter. Combining the ad distribution to Yahoo! and Microsoft front-end search domains plus ad distribution networks would create a viable alternative to Google.

A merger, though, between Yahoo! and Microsoft will stifle innovation. Having been at AOL when they merged with Time Warner, it was frustrating to watch innovation grind to a halt. No, forget about a merger and find another way to compete with Google, perhaps by spinning off Overture. Or, Yahoo! can start by implementing these changes.

Tags (build your own w/ TagBuildr): yahoo search marketing, microsoft adcenter, google adwords, search advertising, gigaom, overture, ovrtr