We asked several people in the industry – all of whom happen to be ex-Yahoos, some of whom work at companies that do business with Yahoo.
Here's what they had to say.
"Marissa certainly wants to move the search deal from Microsoft to Google... Maybe this is the first of a few chess moves."
That deal has been in the works forever. [Former interim CEO] Ross [Levinsohn] and [former Yahoo corporate development executive Jim] Heckman were pushing for that big time.
The deal addresses two key issues:
Bid density. The hope is that this deal creates a really stable price floor raising rates across the board. Because [Yahoo's display advertising exchange, Right Media] has been under-invested in on many levels, the amount of demand is significantly less than the amount of supply, so economical principals dictate that as such, prices will fall. This deal may impact pricing and yield management that impacts all campaigns all the way through the sales org by creating a new equilibrium point.
If you look at Yahoos financials, their display ad business which is the main one they control (not search) is continuing to decline. Sales leadership is weak and good sales execs continue to leave. This deal signals the fact that they do NOT have a good handle on how to run their own business.
Make no mistake, it's a bandaid. It doesn't address their fundamental issues it just masks the symptoms for awhile.
"Why doesn't Ross Levinsohn just send you the strategic plan that he presented to the board and you'll know what they do next"
Insiders seem to be split on what the deal really means.
But one thing is clear: Yahoo's deal with Microsoft is likely forcing it to accept lower revenue per search than a comparable deal with Google would.
So Mayer would be crazy if she weren't trying to either shift to Google or use Google as leverage to extract a better deal from Microsoft.
The real fun begins on March 31 when Yahoo and Bing go their separate ways followed by Jack Ma stepping down on May 10. A deal with Yahoo Japan is imminent and could be announced any day.
Sentiment: Strong Buy