Yahoo and MSN VS Google

With 3 major news stories in this week, one on the imminent launch of Yahoo's contextual advertising program and then today's news about MSN's paid search program, and finally the announcement of Ask Jeeve's CPC program, it's obvious that everyone is gunning for a slice of Google's advertising pie.

What will Yahoo Publisher Network, a competing contextual advertising program, do to Google's AdSense program? For the short term, not much - I am sure a lot of AdSensers will adopt a "wait and see" policy, or conduct limited testing of YPN on sites that may not be performing well with AdSense. However, the long-term potential harm to Google's bottom line is vast, depending on how badly Yahoo wants Google's publishers. A price war, and more flexibility for publishers is definitely on the near horizon. Good news for publishers.

The announcement of MSN's keyword program is actually worse news for Yahoo than Google, since MSN has been using Overture paid listings for years. However, it is obvious that Bill Gates is taking the threat of Google seriously, and even says so on a regular basis. The more legitimate places there are to advertise, the smaller the overall advertising pot will be for Google. If a business has a $10,000 per year online advertising budget, they aren't likely to increase it 30% to advertise with MSN, they're going to do some test ads and reduce their budget in Y and G's programs in order to spread their exposure.

The truth is there are plenty of businesses with limited capacity - in the lodging industry for instance - if you have 20 (or 200) rooms available, you book 21 (or 201) rooms, not ever. That's where Yahoo and Google can be hurt - there are many, many more advertisers with finite capacity than there are with infinite capacity. Not everyone is selling ebooks and other digital products.

The news about Ask Jeeves CPC is not unexpected, but interestingly, Jeeves will be keeping Google AdWords ads in conjunction with their in-house ads program... Jeeves loves having its cake and eating it too.

Duck and Cover, G - they're coming after you with everything they've got.