After a pretty uneventful 20/20 game in Melbourne, I headed home and was surprised to see the news that Microsoft had instigated an unsolicited USD44bn takeover bid for Yahoo!
Over the weekend discussion was all over Fox Business News, Bloomberg and CNBC about potential implications and the reasoning behind the deal. Lots of reasons seemed to be flung around ... the deal was a necessity due to the growing search dominance of Google, the consolidation of MSNs communication properties with Yahoo's would create an almost monopoly which would stop Google from making traction with gmail, gtalk etc, and the most logical was that the two both required this sort of scale to compete ...
Today there has been some talk of what it means locally ... with both msn and Yahoo! in JVs with local 'traditional' media companies. Lets put that aside for the time being and look at what each product can really offer the other in a local context.
For my money that is what this deal is really about - and the jury is still out on what Yahoo! can really offer MSN. In the US MSN is reported to have not turned a profit in 2 years, whilst Yahoo! is staring down the barrel of becoming increasingly irrelevant every month as Google trumps them in search and smaller competitors chip away at their numbers with better specialised options.
In AU the situation is somewhat different. Ninemsn is still the dominant player in the display market and even though it has lost some share recently, it is still the market leader and is a top player in most key verticals. Yahoo!7 remains at under 5m users over 2 years since the site launched, and in some of the areas it has said it will challenge it has struggled (especially mail, messenger, search and homepage) despite having the leading TV network in Australia behind them.
What needs to be looked at is the incremental audience MSN will achieve by acquiring Yahoo! in a local sense. What can Yahoo offer (locally) to give them the scale they supposedly need. Again, this is looking at it in a local sense ONLY.
Source: Neilsen Netview, January 08
ninemsn - 8.19m
Yahoo!7 - 4.98m
81% of Yahoo7's audience is on ninemsn, whilst only 49% of ninemsn's audience uses Yahoo!7
Ninemsn's audience is more engaged, with users returning 15 times per month compared to 9 for Yahoo. Ninemsn users spend 2 hrs 21 minutes on the site, Yahoo!7 1 hour and 2 minutes. The topline UB benefit for ninemsn from a merger would be small.
The last 12 months: ninemsn has added 189,000 total users, Yahoo! has lost 109,000
Windows Live Mail - 3.56m
Yahoo! Mail - 1.43m
Windows Live has 36% of Yahoo! Mail users ... so a mix of the two could be a pretty powerful beast. Together the two would have more than 4.4m users. In terms of engagement the two are on par.
The last 12 months: Ninemsn has lost 612,000 users, Yahoo! has gained 22,000 users.
Strongest player: Windows Live Mail would absorb Yahoo!7 Mail.
ninemsn Messenger - 4.47m
Yahoo!7 Messenger - 549,000
63% of Yahoo Messenger users also use ninemsn messenger - msn is clearly winning this one. In terms of engagement it's about level, but Yahoo! have never been able to even make a dent in the dominance of MSN Messenger over the past 4 years. A merger would only offer MSN an additional 198,000 users - just over a 4% increase.
The last 12 months: Ninemsn has lost 142,000 users, Yahoo! 102,000 users.
Strongest player: Only a fool would kill the ninemsn messenger brand here - would absorb Yahoo!7 Messenger users.
Ninemsn Channel Nine News - 1.85m
Yahoo!7 News -946,000
Ninemsn have almost double the audience of Yahoo, with 31% of Yahoo news users also using ninemsn News. A combined entity would generate 2.5m users. However the key is ninemsn is better at keeping their News readers engaged ... ninemsn news users spend over 17m a month on the site, whereas Yahoo! News users spend just over 7 minutes; ninemsn news users view 25 pages compared to Yahoo!'s 9.
The last 12 months: Ninemsn has added 356,000 users, Yahoo!7 has lost 40,000
Strongest player: Ninemsn. Numbers and engagement are on its side.
Ninemsn - 3.71m
Yahoo!7 - 1.83m
Homepage ad placement is still a popular choice for AU agencies ... so there is good money in having a high traffic homepage. Combined the 2 add up to 4.86m users ... strong numbers.
The last 12 months: Ninemsn have added 619,000 users, Yahoo has lost 35,000 users.
Strongest player: Ninemsn. Their homepage is the most in demand page in the country due to the reach achieved.
Wide World Of Sports - 465,000
Yahoo!7 Sports - 183,000
Almost zero overlap here ... less than 5%. Most interesting is over 48% of Yahoo! traffic is to the .com domain - not the local domain. Not a whole lot here for ninemsn to take.
The last 12 months: Ninemsn has added 270,000 users, Yahoo! has lost 41,000 users
Strongest player: Ninemsn WWOS. Neither Yahoo! nor 7 locally has a strong umbrella sports brand.
Last but by no means least, most of the talk so far has centered around search and the proposed MSN/Y deal really allowing both to give it a crack ... in AU Google is absolutely dominant and MSN and Yahoo! struggle ... MSN is actually the number 2 player and has been making strong ground.
Ninemsn Search - 2.84m
Yahoo!7 search -1.35m
Google Search -9.07m
86% of ninemsn's search audience use Google ... with 83% of Yahoo!s audience also using Google.
Ninemsn search users only return on average 2.6 times a month, Yahoo 4.1 .., whilst Google users return 12.2 times a month. A combined Yahoo/MSN search audience would equate to 3.6m people ... hardly the scale both require to take down Google.
Search delivers the most gloomy news for Yahoo! - and the news that no doubt is causing a lot of headaches ... they have lost 296,000 users over the past 12 months ... roughly 22% of their audience. In the exact same period MSN has picked up 707,000 users - an increase year on year of 33%.
In the past 12 months Google has added 708,000 users.
If this deal is about search, locally one could argue it will make no difference at all. Even if the two can combine to take a strong share in display revenues, the real growth locally is in search - which has largely been untapped by big money marketers. It is difficult to see where MSHOO would make up ground on Google - revenue ground.
Take a further step back from this and have a look at the figures in isolation and it doesn't tell a good story for Yahoo! locally at all ... they are struggling to hold audience, let alone build on it ... and in the key areas it performs well outside of AU (namely search, messenger and homepage) it is losing users, whilst gaining approx. 5% in the Mail category. Ninemsn is holding its own - which is no mean feat after 5 years of dominance - but must start looking for new ways to increase audience - mobile especially would be a focus one would imagine ... pushing their strong properties onto the mobile device.
Right now it's just hypothesising ... who knows if the deal would even go ahead. There is even talk News might give Yahoo! a takeover crack ... (that would give the combined entity 7.3m users locally) ... or that Yahoo! will look to partner with Google. Whatever happens, it is clear that 08 is going to be a year full of shake-ups, especially locally.
EDIT: Duncan Riley at TechCrunch gives his opinion here - http://www.techcrunch.com/2008/02/02/microsoft-yahoo-what-will-stay-and-what-will-go/