KhalidsLife.com

In this volatile period where the credit crunch is affective us all and banks are less willing to lend, not so many companies are willing to launch hostile bids for others, even fewer at $44bn. So let’s kick this post off by giving Microsoft a small clap for their enthusiasm to purchase Yahoo.

I think Microsoft’s bid is partially due to being opportunistic. Yahoo need a helping hand after falling stocks and a lack of morale have left them in a bit of a pickle. The question is, would Microsoft make a decent return on their possible investment and how would this affect shareholders, affiliates and publishers? Whilst this may now be old news, I think it is important to highlight some interesting points that may affect web publishers in the long run.

According to some sources, the best opportunity for Microsoft to increase Yahoo’s revenue seems to be hidden in the depths of alternative forms of advertising, other than search. This is Google’s strategy, with their planned $3bn purchase of only media agency DoubleClick. Microsoft are aware of this tactic and so have laid eyes on aQauntive, with a $6bn price tag.

The idea is that both Google and Microsoft could use the platforms and technology to place ads more cheaply and efficiently. The automation of this could result in problems though. Any Tom, Dick or Harry can easily setup a site regarding health care or dieting and apply for the publisher program to display ads as a Google/Microsoft publisher partner but will bid brands, such as Unilever and Procer & Gamble want this?

Probably not and so they could easily end up re-locacting their investment in that area, perhaps to large established sites with their own internal advertising department. I mean, why would a multinational cooperation want to associate their brand with the average 15 year old’s MySpace page?

The result? With big brands backing out, dilution of the quality of network advertisers will probably occur as Google/Microsoft attempt to increase revenues and make up for their big brand losses. Less income for web publishers will most definately be a knock-on effect. You see, an ad is not a commodity that can be substituted or exchanged like a share, it really does matter to advertisers where their ads appear and it matters to publishers which ads appear on their sites. And for that reason, Google/Microsoft would have to tighten their policies surrounding accepting new publishers to avoid diluting their platform.

The future? The future looks hazy, especially with the possibility two major companies - Google and Microsoft - both who are ruthless and profit hunters, controlling the majority of internet advertising. This means earning an income online may become more difficult, less financially stable and less profitable.

My advice? Ride the waves out a little and let’s see what really happens, but don’t put all your eggs in one basket and perhaps invest offline too.