Shares of Local.com
I'm guessing that most shareholders of the world's largest software company aren't even aware that they got dissed over the weekend. Local.com is a bit player in local search. It may claim to reach 20 million consumers every month, but it still rang up revenue of just $84 million last year.
Why did Local.com's stock get slammed? The company hosed down its initial guidance for its recently concluded quarter -- and blamed Yahoo!'s
Local.com populates its search results through Yahoo!, which means that it's now serving up Bing ads instead. According to Local.com, Bing ads are generating lower revenue per clicks. In other words, advertisers are getting away with lower keyword bids through Bing. Local.com has started exploring optimization options, which may include turning to Google
This is problematic for Microsoft in two respects. First, if advertisers continue to pay less, this will obviously translate into bad news for Bing. Terms of Yahoo!'s outsourcing deal included pricing guarantees from Bing during at least the first 18 months of the 10-year deal, since CEO Carol Bartz wouldn't be staging an in-house retreat without juicy compensation. In short, Bing will pay the price for coming up short -- twice.
Second, Local.com can't be the only site smarting from the transition. If other websites were counting on the syndication of Yahoo! paid search ads for monetization, and Bing has disappointed them, too, chances are they'll also start looking elsewhere.
It certainly doesn't help that Microsoft continues to lose money in its online operations. How will Google haters feel if Yahoo! and Bing's joint plan to tackle Big G actually benefits the world's top search engine more?
Local.com took the hit on Friday, but Microsoft's left with a bruise that won't go away.
What do you think of the Yahoo! deal with Bing? Share your thoughts in the comment box below.
