Last Monday Yahoo officially rejected Microsoft’s bid at $31 per share. Sources claim the bid undervalued the company and it’s assets and that a bid of at least $40 per share would be a more realistic offer but not necessarily accepted. Even though the current market value is way below this.

There is some credibility to Yahoo’s claims to this value. As one of the originators of today’s internet, the Yahoo brand is huge. Aside from Google, Yahoo is the best known brand on the internet, but this will take some careful re-direction to monetize this again.

The online properties that Yahoo have access to and own rival those that make Google so powerful. Flikr, the online photo sharing site was courted by Microsoft before Yahoo’s acquisition, and is said to be a key feature in the takeover plans of any potential suitors.

Yahoo Mail is the most popular web mail system and access to all that user data would be a significant incentive to buy out. With Microsoft adcenter demographic targeting options this could become a powerful marketing tool.

By holding out and rejecting the Microsoft bid, the Yahoo execs could be making any number of statements. They could be waiting for a better offer. Interest has been shown from News Corp, Time-Warner-AOL and other sources.

They could be making a stand on their own independence, looking to get back what Google has taken from them.

What ever the plan, the yahoo board may have to act faster to ensure this is still their decision. The offer has resulted in some mixed responses from many areas, but the most important opinions will be the shareholders. If Microsoft or anyone else wanted to push this, the option to approach shareholders may be viable.

In a blog entitled “Yahoo! shareholders in favour of selling”, Eric Jackson, president of Ironfire investments is asking more bidders to enter the race, openly stating that $31 is the starting bid and all bids above this will be considered. Mr Jackson is also asking other shareholders to join with him to prevent Yahoo continuing independently, seeing this as “a recipe for a $17 stock price”. If this group of disgruntled shareholders, by the name of “Yahoo Plan B”, can gather enough momentum, they could force Yahoo’s hand into a quicker decision than expected.

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Forget Hatton vs Mayweather or any fight with Joe Calzaghe. The Fight of the decade is and will be Google Vs Microsoft!

This is a battle that has been building up for some time and will only get more fraught. Pound for pound we have two very evenly matched opponents. Google is the clever fighter picking the punches carefully with carefully developed approaches and huge amount of intelligence. Microsoft carries the weight of massive financial backing and the ability to use that buying power to make big hits in the marketing and computing world. We can run thought the round for round commentary and summary of what’s to come.

Google Search Vs Microsoft Live

Microsoft launched its search along with the MSN portal, initially taking the sponsored links from Yahoo/Overture. The traffic volumes are where Google land a huge blow, taking up to 80% of UK search traffic compared to a measly 5% for Microsoft. Live search tries to get a point back by gaining a better home browser proportion, but the round definitely goes to Google.

Adwords vs adCenter

Adwords launched in 2003 and has boomed ever since. With a massive proportion of the search volumes, globally and in the UK. The interface goes though fast continuous development. Microsoft Adcenter launches in 2006 after taking the sponsored links from Yahoo. The move works well and creates a good platform for cheap traffic. After the first full year the conversion rates are the highest for any search engine, released figures show at 5.4%. Google continues to show a strong fight and the number of hits (on Google.com and Google.co.uk) overwhelm Microsoft. This is another lost round for Microsoft and will be an area they continue to lose until they can increase on volume. Whilst all advertisers should be on both engines the revenue will always move towards the volume of traffic.

Google Apps Vs Microsoft Office

This should be where the Microsoft power house hits home. The Microsoft office suite has been the established software in the majority of offices and schools for more than a decade. Google throws their Google Apps in to the ring. Offering easy file sharing over the internet, forward compatibility with other office software and the biggest blow, its free! Microsoft answers back with a flurry of promotional hype around the newest office release and also some sneaky shots with a potentially free version of office supported by ad revenue. The crowd of other software producers also affects the control Microsoft has on this market. The software giant is wavering but still takes the round.

Google Content Networks Vs Adcentre Content Network

Again Microsoft are slow out of the corner with Google scooping up My Space and a host of other publisher partners, although You Tube may have been a reach too far. While trying to find ways to monetise the You Tube platform may unbalance Google, the traffic volume ads more power to its content match and revenues. The initial launch of Microsoft’s content network in the adCenter has had a great response and claims of conversions rates as good as search have made the UK launch worth waiting for. Microsoft’s financial power lands a big blow when the rights to serve ads on facebook are tied up with a big money deal. This round is still in the balance and will go right to the bell.

The next round will be local search. Local search is described as one of the biggest growing markets for next year and set to grow to $13 billion by 2010 (according to the Kelsey Group). Many engines and services are looking to create local advertising platforms. Yell launching theirs just 3 weeks ago. Before Google and Microsoft wade in, Google looks the stronger with the well established Google Maps, and Microsoft aim to strengthen their position this week with the acquisition of Multimaps, costing a reported $50 million.

This fight will continue to the bitter end. Currently Microsoft looks to be on the ropes but the financial power cannot be overlooked. As spectators and consumers, we will be the victors, as the advertising does not need to be confined to one platform. Campaigns need to incorporate both platforms and as traffic moves so should the budgets.

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