This image was lost some time after publication.

Why did Yahoo turn down Microsoft's offer and — to the disappointment of shareholders, employees and board members — go for Google's instead? Because Google will allow Yahoo to continue selling some search ads to its display advertising clients, while Microsoft would have insisted its sales team handle all Yahoo search buys. Allowing its display advertisers to purchase "integrated media" — search and display together — is very important to Yahoo. But is it important to Yahoo's customers? According to our sources on Madison Avenue, not really. Or, at the very least not yet.

"Clients often buy both, but paid search and display are often managed very separately, sometimes through different groups or agencies," one interactive-agency COO told us. Another source, a senior partner at an agency, adds, "Typically search and display existed separately, either with separate budgets, sales contacts and teams, or sometimes account management teams."

The ability to purchase search and display at the same time isn't important to agencies because "there's no logical link between them," the COO said. Display advertising and advertising serve different purposes. Display advertising is supposed to make you want to eat Fritos; search advertising points you to a website where you can buy the snacks by the case.

Surely Yahoo is just as able to speak to customers as we are. So why haven't they heard all this themselves? Answer: They're marketing the company to Wall Street, not Madison Avenue. For years, Yahoo search hasn't been able to compete with Google search, so Yahoo has been talking up its ability to sell display plus search as a differentiator. But agencies don't buy Yahoo's sales pitch. Said one agency vice president, "It just further goes to show that Yahoo doesn't have their act together."
(Photo by midweekpost)