The recent announcement of the Microsoft®/Yahoo!® partnership shouldn’t come as a surprise to those entrenched in search engine marketing (SEM) and other search-related matters. Microsoft can’t come to terms with the fact that they aren’t the category leader and Yahoo! has been struggling for years to find an identity made even harder with their revolving door leading to the management suites.

In short, this partnership combines the better technologies of both of these companies. Microsoft’s Bing™ will provide the technical search programming and Yahoo!’s paid ad serving technology will handle the pay-per-click and display advertising on both sites.

The reinvention of Live to Bing, which includes a few new features and nice high-resolution imagery, wasn’t enough to raise my interest in adding Bing to the search engine mix for our Clients. The old saying “lipstick on a pig” comes to mind. But now, with the combined share of these two companies, it seems we’ve got a bigger pig to consider, and consider it we should.

Managing search campaigns requires daily monitoring, ongoing analysis and report comparison. It takes a lot of time to manage a campaign on one search engine, let alone three. Before this partnership, the audiences for Yahoo! and MSN separately were too small to even consider adding in the mix for our Clients.

In a recent January 2008 survey from compete.com (see graph below) — an online competitive intelligence service that combines site and search analytics — Google™ had 69% of share of Web search, Yahoo! had 17% and MSN with 9%. Why would I consider dedicating some of my Client’s limited budget — and more of our labor resources — on a search engine that gets less than 9% of the search share?

This partnership increases both search engines’ reach (Microsoft is really the big winner here) and potentially creates a valid second-tier engine for advertisers to supplement their Google campaigns. The partnership would bring the two companies’ combined share to nearly 30%, still less than half of Google’s total. That being said, the takeaway is that if you aren’t advertising on Bing/Yahoo!, you aren’t reaching nearly 30% of your potential search-using audience.

I wouldn’t sacrifice the budget of your existing Google campaign until the jury is back in on Bing/Yahoo!. But for some advertisers, there is sure to be an opportunity to see if a shift in budget results in more frequent sales/leads from the combined larger audience. If set up and managed effectively, a SEM campaign’s effect on sales is so transparent that it makes it a great avenue to test theories.

Google does search but it’s branching out into other software and mobile platforms.

Microsoft does operating systems but they are branching out to search. Yahoo! does…well it sounds like they are still trying to figure that one out.

It’s easy to sit on this side of the screen and tell these companies to play in their own sandbox, but Google learned with their radio project to cut their losses and refocus their efforts on core competencies. Google’s lead is formidable and if Microsoft can’t make this work with Yahoo! they should bow out of this battle for search supremacy.