Wednesday, July 29, 2009

Bing-Yahoo Alliance Could Be Long-Term Issue for Travelocity

The ink barely is dry on the Yahoo-Microsoft search partnership in which Yahoo will use Bing technology as the default search engine on Yahoo websites and will lead both companies' sales efforts on CPC advertising.

I have few solid answers at this point, but only questions about what this might mean for Travelocity, which is the air, car and hotel provider for Yahoo Travel.

As you know, when Microsoft launched Bing, it integrated Bing Travel (Farecast), the metasearch and advertising/media business that Microsoft acquired, into the Bing search engine.

A new Yahoo-Microsoft website outlines some of the terms of this new search alliance.

Among the key planks:

• "Microsoft's Bing will be the exclusive algorithmic search and paid search platform for Yahoo! sites. Yahoo! will continue to use its technology and data in other areas of its business such as enhancing display advertising technology.

• Yahoo! will become the exclusive worldwide relationship sales force for both companies' premium search advertisers. Self-serve advertising for both companies will be fulfilled by Microsoft's AdCenter platform, and prices for all search ads will continue to be set by AdCenter's automated auction process.

• Yahoo! will innovate and 'own' the user experience on Yahoo! properties, including the user experience for search, even though it will be powered by Microsoft technology."

This latter element presumably is a key safeguard for Travelocity regarding what might happen to the Yahoo-Travelocity contractual relationship. That is, Yahoo will "own the user experience" on Yahoo sites and undoubtedly maintain its contractual home page link to Yahoo Travel, aka Travelocity.

But, in my opinion, this new Bing-Yahoo alliance greatly buffs up Bing Travel -- and also helps Bing Travel partner Orbitz -- because Bing-Yahoo will get about 30 percent of the U.S. search market compared to Google's roughly 65 percent.

So, six months or so from now, when consumers search for New York to San Francisco flights from the Yahoo home page using Bing search technology, one can only wonder how Yahoo will handle the display.

Will it be branded Yahoo but look like this with a link to Farecast's predictive technology?

Will the search display integrate Yahoo Travel in a way that is absent now?

Today, a New York to San Francisco air search on Yahoo displays Yahoo Travel as the fourth organic search result.

The prominence that Bing Travel gets in Bing search results is absent for Travelocity when consumers use the current Yahoo search box for travel queries.

As a company that specializes in metasearch and facilitated search, Bing Travel may have an edge over Travelocity through the Bing-Yahoo alliance because Travelocity, unless it enters travel search in new ways, focuses most of its efforts on its role as an online travel agency, although it, too, is trying to build its advertising/media business.

However, the Yahoo-Bing alliance may benefit Travelocity, too, in the short term, as advertisers welcome a viable alternative to Google.

As you may recall, there were some people who accused Travelocity of killing FareChase by offering Yahoo a sweeter deal a few months ago and convincing a restructuring Yahoo to drop its own FareChase metasearch offering.

So, I wonder if, a few years from now, we might look back at today's Microsoft-Yahoo alliance as a harbinger of the phasing out of the Travelocity-Yahoo relationship.

Nothing on this front is certain, of course, but I am sure that I am not the only person today who thought about this type of scenario.

Meanwhile, today's Microsoft-Yahoo news means that Google undoubtedly will be dusting off plans for the Brave New World of Google Travel 3.0.

Along with Twitter yesterday introducing a search box of its own on a new Twitter home page, the past couple of days have ample potential for disruption.

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