The long awaited regulatory clearance for Microsoft and Yahoo! to form a search alliance is now fact. The search industry had been expecting this partnership to materialize for over a year now. The following is a form letter sent out to both Yahoo! and Bing adCenter advertisers;

Dated Feruary 18, 2010 11am PST

From Yahoo!

Dear Advertiser,

Yahoo! and Microsoft have now received regulatory clearance to form a search alliance. This is a significant milestone and an exciting first step in our combined effort to help you reach even more customers with greater ease and efficiency.

What's Ahead
There will be no immediate changes to your Yahoo! Search Marketing account. Both companies are committed to making this transition as seamless and beneficial to you as possible. Our aim is a high quality transition of advertisers and partners in at least the U.S. prior to the 2010 holiday season. However, we may wait until 2011 if we determine this will be more effective. Approximately three months in advance, we'll begin providing you with detailed information about what to expect and how we will assist you.

How the Yahoo! and Microsoft Search Alliance Will Benefit You
Once implemented, the Yahoo! and Microsoft Search Alliance will enable you to:

Reach more customers.
Reach up to 150 million searchers1 and get approximately 62% more search volume2 than on Yahoo! alone through a new, unified search marketplace combining the Yahoo! and Microsoft networks. To help drive future growth in search volume, Yahoo! will continue to significantly enhance the search experience on our leading web properties.

Save valuable time and effort.
You'll log into one place–Microsoft's adCenter–to manage campaigns, for greater efficiency and a better ROI. With just one buy, you'll reach users on Yahoo! and Microsoft sites, as well as other premium partner sites.

Benefit from rapid innovation.
Yahoo! will deliver new features and innovations to the world's favorite online destinations, content, and web products used by hundreds of millions of consumers to connect to the people and things that matter to them most.  Microsoft will innovate the underlying technologies that drive high quality algorithmic and paid search results.
 

We appreciate your business and look forward to bringing the benefits of the Yahoo! and Microsoft Search Alliance to you.

Sincerely,

Your Partners at Yahoo!
-end 

From Microsoft adCenter

Microsoft® and Yahoo! have now received regulatory clearance to form the Yahoo! and Microsoft Search Alliance in the United States and European Union. This milestone is an exciting step in our effort to give your business a time-saving and cost-efficient way to connect with a larger combined audience of potential customers.

How the Yahoo! and Microsoft Search Alliance benefits you.

After the Yahoo! and Microsoft Search Alliance is implemented, you will:

- Reach more potential customers: Search ad inventory from both the Yahoo! and Microsoft networks will be joined in a new, unified search marketplace powered by Bing™ , with a combined audience of over 150 million searchers in the U.S and nearly 577 million searchers worldwide.

- Save valuable time and effort: You'll use a single platform—Microsoft adCenter—to manage your campaigns easier and faster. With just one buy, your search ads will reach users on Bing, Yahoo!, and other premium partner sites and networks, such as The Wall Street Journal Digital Network, msnbc.com, FoxSports.com, Facebook, and Buy.com. 
 
What's ahead
For now, it's business as usual; there is no change to your account or service. Your ads will continue to serve on Bing search results pages, and you will continue to receive the same great service from Microsoft.

Both companies are committed to making this transition a seamless experience. Our goal is to bring the Yahoo! and Microsoft Search Alliance to the U.S. by the end of 2010, prior to the crucial holiday season, with additional countries following on a staggered schedule beginning in 2011. 

As our transition dates approach, we will contact you with information about what to do next. In order to ensure you continue to receive important service updates, please verify your contact information is current in Microsoft adCenter. View our help topic: Change contact information. 

How to learn more
In the meantime, you can familiarize yourself with the Yahoo! and Microsoft Search Alliance by visiting our new resource, searchalliance.com, where you'll find plenty of additional details, including press releases, FAQs, and more!

We appreciate your business and look forward to bringing you the benefits of the Yahoo! and Microsoft Search Alliance.

Sincerely,

The Microsoft adCenter Team
-end

I can only hope that this union will bring about a new era and a more level playing field for small advertisers. Expectations are that Google will be launching a new easier ad manager for the less techincal to setup an Adwords campaign. Will this be enough? I doubt that it will. These companies need to figure out a way to cost effectively bring advertisers into the fold and offer them better returns or there will be an astounding shakeup in the search market. While this is just speculation on my part, the vast majority of advertising dollars comes from the small to medium business. These smaller businesses have been seeking alternate advertising streams (such as Facebook) to gain more ground in their advertising models. A large percentage of Adwords are pumped to levels that offer negative returns. Because of Google using CTR as the primary quality score attribute it has fueled bid pumping just as they intended. The problem is that the smaller advertisers can't afford to play in the adwords sandbox anymore and you will see a drop in ad dollars because of this. 

If this union between #2 and #3 does manage to level the playing field for the smaller advertiser then Google should start worrying.