Is it me or is everyone else stupid?

Certainly for all the Yahoo partners..! In one of the most eyebrow raising incidents I can remember since domain parking began, Yahoo last night announced they were conducting a 2 week trial to serve Google Adsense on 3% of their search queries.

Ok, not a great proportion of their overall capacity and a trial that won’t last for a great length of time. However, let me tell you from 1st hand experience that the only reason for conducting such a trial is with a view to signing a longer, more comprehensive arrangement. And look what happened when ASK did a similar thing. Google’s modus operandi in these situations is such: Sign a 2 year deal to serve Yahoo and Yahoo’s partner sites with ads. Then, once Yahoo’s ad network and market share is irrecoverable, sign a 5 yr deal and gazzump all the partners they no longer want.

Which means what? Well, the market would have just ONE major PPC provider. Yahoo would add an extra $1bn in extra revenue for their shareholders. Bidding on Google adwords would skyrocket. And Google would be able to exert a “take it or leave it” totalitarian approach with partners. Scary stuff. Ive heard talk that Google have actually considered pulling parking to all but the top traffic receiving domains.

The alternative smokescreen is what? Yahoo are showing shareholders (pre a Microsoft hostile takeover) that there are other options available that would increase shareholder value. Adding an extra $1bn in revenue is not to sniff at, especially when it involves no investment. Yahoo are already the largest in terms of display advertising and so as a result of them leaving the search marketing arena (or at least sub syndicating it through Google) Yahoo shareholders would then see a valid “lets stay as we are” alternative to any MS bid.

Personally, I think the end result is still as we are. Microsoft will raise their bid by $5 or so per share for Y!, the deal will go through and advertisers will once again have a valid alternative to adwords. Doomsday scenario is that Yahoo hand over their search marketing to Google and internet marketeers that rely on Google income will see a steep decline in revenue because there will simply be nowhere else to go.

Add to the fold the possible AOL deal, MS/AOL joint deal and you have, in the very least, unprecedented fluidity and uncertainty in the market the likes of which we’ve never seen before. Battle helmets and flak jackets on everybody.