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MSN Paid Search Test Good for Advertisers, Bad for Yahoo

MSN’s move to start its own paid search listings program will benefit advertisers but temporarily hurt Yahoo, industry observers say. Microsoft announced last week that MSN is beta testing its own paid search listings program, taking over the job from current provider Overture, owned by Yahoo.

The move will help the company compete with Google’s AdSense paid listings program and Yahoo’s new Yahoo Search program through Overture in the competitive arena, in which the main way to generate profit is paid search listings.

“It’s not a great thing for Yahoo, but it is a great thing for advertisers and marketers,” said Chris Winfield, president and founder of search engine marketing firm 10e20, New York. “The more competition and the more options, the better.”

Advertisers have had little control over paid listings with MSN, other than through their Overture accounts, Winfield said. Now, marketers can better concentrate their funds and listings on the three big ones: Google, Yahoo and MSN, managing them separately as three different accounts.

“Advertisers are looking for control, and … Microsoft is looking to provide advertisers with more control,” said Kevin Lee, chairman of Did-it.com, New York.

The move is expected to affect Yahoo and Overture in the short term, as some advertisers already plan to take dollars from their Overture accounts and place them with MSN.

“Yahoo will certainly lose some revenue currently delivered through MSN’s back-fill of Overture results to the featured listings sold directly by MSN’s sales team,” Lee said. “MSN’s evolution will likely mean that there will be less reliance on Overture’s results.”

MSN will only benefit from the move, letting it take all the profit from its paid search listings instead of its current arrangement with Yahoo, in which it reportedly garners 85 percent of advertising payments.

Christine Blank covers online marketing and advertising, including e-mail marketing and paid search, for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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