Google Opens Up AdSense, Undermining Yahoo/Microsoft

For some reason the Microsoft-Yahoo! news got a lot more coverage on Monday than an announcement that came out of the Google (GOOG) camp…an announcement that I’d argue is much more significant to all three companies than Microsoft “possibly” buying Yahoo!’s search business.

Google is announced that it would be opening up its content network (AdSense) to display ads from 3rd party advertisers and networks.

That means other advertisers can now tap into Google’s publisher network and start serving up display ads. The advertisers have to be certified by Google, of course, but this is a fantastic move for Google even with a limited number of certified ad networks.

Here’s why:

1. The move diminishes the possible effects of a combined Microsoft-Yahoo! display ad business. Any type of closed ad network Micro-hoo would’ve created has just become much less valuable.
2. By Google giving its publishers more ways to make money the company stands a better chance of being the primary ad platform used by millions of web publishers (why go to the ad networks if the ad networks are already coming to them?). This is makes me think of Warren Buffett’s ideal investment: “a toll booth in a one bridge town”.
3. I haven’t seen any details about monetization yet but this could also be a monster revenue driver for Google, especially when you look at it in the context of the Double Click deal.

In any case, it’s a major move for Google and I think the implications are going to be huge for Google - and for Microsoft and Yahoo.

Disclosure: No positions

Comments

[Mitoman:]

first of all, microsoft wouldnt change its name if it bought out yahoo, it would simply merge its msn with yahoo. second of all, microsoft needs yahoo for the online advertising business, which they can just buy out some other company to do so

2008 Jun 13 12:06 AM