Will you look at that? Another group is speaking out against Yahoo!'s (Nasdaq: YHOO ) deal to outsource some of its paid search space to Google (Nasdaq: GOOG ) .
It's the World Federation of Advertisers this time, sending a letter to the European Commission with concerns over the deal. The network of advertisers feels that an increase in Google's already dominant market share position will lead to higher marketing costs for potential sponsors.
This is getting ridiculous. It's not just that every day brings a new collective that sounds like some nascent wrestling league into the fray. The rub is that GooHoo is inexplicably getting hit from all sides. Advertisers feel that they will spend more. Publishers feel that they will make less. Unless Google plans on pocketing a bigger piece of the revenue-sharing -- something that is unlikely if it awakens Microsoft (Nasdaq: MSFT ) into making a serious splash into this lucrative niche -- both sides can't be right.
In fact, both sides are wrong.
Let's think this through. When Yahoo! suggests that the deal can add as much as $800 million a year in incremental revenue to its income statement, it should be enough to silence the publishers. It is Yahoo! conceding that Google is a better platform for monetization.
As for advertisers, the implication is that they will pay more, but hold up on those cow catapults. It's a very incomplete equation. The reason why Google is so much better than Yahoo! at paid search is because it has a deep bench of inventory. Couple that with Google's targeting technology, making sure that the most effective -- and relevant -- ads are served, and you have a system that is built to deliver more leads per page view than Yahoo!.
Are individual Google ad clicks costing advertisers more than Yahoo! ad clicks? Perhaps, but Google's platform is clearly superior. In short, this deal will create more leads for advertisers. How can they not realize this? I don't expect advertisers to send Google candy hearts, but they should be grateful that Yahoo! is taking the initiative to milk more lead-generating power out of its massive page views.
Yahoo! won't be the first heavy to turn to Google for a hand in monetization. Time Warner's (NYSE: TWX ) AOL and News Corp.'s (NYSE: NWS ) MySpace also tap Google's ad inventory. The publisher and sponsor outcry is not only misplaced; it is unfair to Yahoo!. Denying Yahoo! -- and it's pummeled shareholders -- the same right to better monetization as other Google-turning media giants is insane. Unless the Fed wants to kick in with that $800 million in annual top-line production that Yahoo! is leaving on the table by going it alone, everyone is losing.
Yahoo! makes less money. Advertisers generate fewer leads. Publishers suffer as Yahoo! bleeds to death slowly.
Is this what the market wants? An emaciated Yahoo! on a hunger strike? One way or another, Google is going to own this market as long as Microsoft keeps tapping the snooze bar.
Other ways to spin the content bottle: