Microsoft values Yahoo Visitors at $1,200 Each
Written by Max Freiert (contact - e-mail) -- February 1st, 2008 |
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The big news of the day is Microsoft’s $45 billion dollar bid for Yahoo. While the blogosphere will be abuzz with predictions of how this will shake up the online landscape, there’s a very real impact on pure “traffic ownership.” We took a really brief look at what the potential merger means for Microsoft in terms of net new traffic, and how this will impact the big players in the space.
Microsoft currently owns three of the top ten most trafficked domains (as ranked by UVs). Yahoo.com currently ranks first across the entire web on this metric. What’s interesting is that, because of both Yahoo and Microsoft’s massive audiences, the overall pool of Unique Visitors grows by a surprisingly small amount. Looking at the chart below, Microsoft Properties* and Yahoo.com share 96 Million Visitors. In fact, the net new traffic, in terms of US Unique Visitors, only grows by 31% (37 million people). To throw the transaction value into the mix, that translates to $1,186 for each net new visitor.
But Unique Visitors are only one component of traffic measurement. In terms of total page views and Attention, a Yahoo acquisition would nearly double Microsoft’s numbers. The chart below shows the net new Unique Visitors, Pageviews and Attention that would result from the potential merger.
How would this potential merger shake up the overall internet landscape? Two-fold.
- Microsoft would dominate the web in terms of display ads. In addition to the billions of page views on various Microsoft domains, their ad network will grow exponentially.
- Microsoft would become a much bigger competitor in the search market.
The chart below shows how the combined search, and site traffic will reshape the top performers on the net.
Google would still take the lions share of online search traffic but the combination of Yahoo and MSN/Live would grab about 25% of all search market share. However, the size of these two online giants would simply dominate any domain level traffic ranking, no matter how you slice the data. In terms of page views, the merged company would get over double the page views of second ranked MySpace.
There are many, many implications of a merger between Yahoo and Microsoft. As we dig deeper into this exciting development, we’ll be sure to keep you posted.
*In this analysis, Compete did not consider Yahoo Inc’s offsite traffic (at sites such as flickr or del.icio.us) and considered Microsoft traffic on Microsoft.com, MSN.com and Live.com
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February 1st, 2008 at 1:56 pm
Looks like based on Attention, the combined entity would surpass MySpace.
February 2nd, 2008 at 8:40 am
In terms of the Search Engine Share By Market - it will be interesting to see how that conflict is resolved. Will one search be eliminated or will it be a Meta Search Engine?
Which search will be the default for Internet Explorer
Will Hotmail and Yahoomail combine or mashup
February 2nd, 2008 at 2:37 pm
What percentage is excepted to flee Yahoo during its move to Microsoft? It seems that Microsoft loves to integrate technology with its own so the merger of Yahoo!’s properties that make use of opensource software will surely be expected to switch to MStech. I see this as a PassPort to a nightmare and one hell of an opportunity for someone to swoop in to scoop up the victims.
February 3rd, 2008 at 9:57 am
Bah, Microsoft won’t rule anything. They are crap, why do you think Microsoft could beat Google? Microsoft knows nothing about search engine algorithm, take a look at their crap MSN. It is so, so damn easy to rank in MSN. If MSN buy Yahoo, the algorithm of Yahoo will be as crap as MSN and it’ll create even more gap with Google.
Other thing that we must remember is Google owns YouTube. Maybe you don’t know that YouTube now is growing very rapidly, I think one day YouTube will be even more popular than Google itself. (well, actually YouTube is popular due to entertainment and sexy girls videos). Now let me ask you, what Microsoft/Yahoo have bought earlier? MyBloglog? much, much smaller than YouTube, obviously.
Do you know after Digg changed its ads from Google to Microsoft, they became crap? Sometimes you can’t login and I think Digg now is only a spam site, different when they still trusted Google. Microsoft knows much smaller about internet, Google is still bigger. I even think that Microsoft (in hardware world) now is not great anymore. Bill Gates’ retirement affected them so much. Take a look at the crap Windows Vista.
February 3rd, 2008 at 10:35 am
I think you are overestimating the valuation of Yahoo visitors. Your current estimates are based on Compete visitor estimates, which only account for the U.S. market. Yahoo has a signfigant presence in Europe, Latin America, India, etc, etc.. It’s a fascinating title, but also a little misleading.
Also, Yahoo’s stake in Alibaba has been valued by $10B by some banks… you’d want to take that off the top before any type of visitor valuation estimate.
February 3rd, 2008 at 11:18 am
Also, a lot of people hit Microsoft.com pages because of regular Windows XP/Vista updates. True, they are UV’s to msft, but does not translate to valuable ad inventory.
February 3rd, 2008 at 11:22 am
Ruddy, Yahoo owns some of the hottest web 2.0 properties around, including Flickr (likely the biggest photo sharing site), del.icio.us, yahoo answers, etc
February 3rd, 2008 at 9:03 pm
Think of it this way - Someone decides to do some advertising, so he puts a little money with Adwords, MSN and Yahoo. After the merger, what does he do? Puts a little money on Adwords and MSN. Whose loss? This is exactly what Yahoo did to Overture, and now the chickens have come home to roost…
February 4th, 2008 at 4:36 am
Es bastante preocupante como se va simplificando el mundo de los buscadores en internet …
Desde España. un saludo muy cordial.
http://www.profesionalnet.net
February 4th, 2008 at 4:37 am
We thought it was a very good tool, lacking in Spanish language, for example. We have seen and we want to continue to use and testing this useful tool.
From Spain. xxx
February 4th, 2008 at 9:52 am
GF - Yes, the combined entity would capture the number 1 attention ranking…handily.
Robert - sounds like an interesting follow-up on our end. Stay tuned.
TJ - Quite true. In all honesty this post takes a superficial look at the merger. Things like additional Yahoo properties (like Alibaba), Yahoo’s ad network, even the massive amount of user data Microsoft could grab (in terms of paid search/targeted ads this is a huge) , all weigh heavily.
Sebastian - Compared to MSN and Live, traffic to Microsoft is minute in terms of any metric beyond Unique visitors.
February 5th, 2008 at 6:50 am
Your valuation of net new visitor equates to the low end valuation of a cellular subscriber in the U.S. or the average for a prepaid cell subscriber in an advanced third world market (e.g. Mexico). Given the single line of business, the stickiness of cell customers, and the comparitively simple execution risks, the value of the cell subscriber should be much higher than the value of the Microsoft’s net new visitor, given equal revenue growth potential and 20% EBITDA margins. Further thoughts on this merger are at http://sophisticatedfinance.typepad.com/sophisticated_finance/2008/02/microsoft-yahoo.html
February 18th, 2008 at 1:41 pm
Was auch immer diese Statistiken aussagen. Es geht um viel, viel Geld und um auch hier irgendwann (am besten kurzfristig) die Nr. 1 zu werden. Denn nur das zählt für Microsoft wie auch für Google, Yahoo, usw.
April 10th, 2008 at 12:46 pm
They should buy http://www.bountyfishing.com
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February 19th, 2009 at 12:36 pm
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