American City Business Journals on MSNBC: Yahoo deal jolts MSN

While it isn't clear why Jeff Meisner at the Puget Sound Business Journal only now suddenly realized that Yahoo's Overture acquisition was a jolt to MSN, his story does broaden the discussion a bit and includes quotes from internal folks at MSN, as well as analysts.

I do think the article overstates MSN's reliance on Overture. Google proved that if you roll out a self-service advertising platform and you have the quality traffic to back it up, you can achieve 100,000 advertisers in short order.

So, MSN could buy a smaller PPC firm, and use their platform, and I have heard quite a bit of speculation on that in relation to FindWhat and other players like AH-HA Search123 (now a Valueclick property) or Kanoodle.

The truth is, MSN shouldn't really want a system that is a pure CPC auction. That doesn't maximize effective CPM to the publisher. A Google AdWords system does maximize revenue to the publisher, but can be confusing to marketers. The question becomes, can MSN use its clout in the marketplace to push search engine advertising into a CPM auction model?

A CPM auction model would force marketers to optimize copy for clickthrough (assuming they want clickthrough) just as they do for banners, and other online media. A CPM auction would also factor in for the publisher the branding impact that search listings have. This would be particularly powerful if search listing started being bundled with an icon or mini banner/button image. MSN has already experimented with thumbnail images served up with search results.

Direct CPM-based search results don't immediately factor in the searcher as the Google system does (using CTR to factor in the searcher's opinion on relevance). But marketers will pull ads that don't perform in a CPM auction, so the speed of adaptation of the system to user behavior (voting) may be slower than AdWords, but marketers feel more in control.