It appears that Yahoo! has given up in their efforts to compete for advertisers PPC dollars, with the signing of an agreement to allow them to syndicate Google ads within their search results. This Yahoo!/Google agreement means that Google’s dominant position in the Pay Per Click market, is now set in concrete.

The share price for Yahoo has been falling after rejecting Microsoft’s takeover bid & shareholders have been very angry at what they feel was a bad management decision. Yahoo has been under pressure from shareholders, for major management changes, while others have even filed lawsuits. This deal with Google is meant to assist Yahoo!’s under performing revenues & appease the shareholders.

With Yahoo! now only achieving 19% search market share, it appears that they have now abandoned the PPC market, its users and advertisers. Google have now increased their already dominant position and bought even more market share, which can only reduce competition & increase costs!

Competition also breeds innovation – for both search consumers and the advertiser & without it, will Google now rest on its laurels & just rake in the money? The paid search market is still relatively young and has been going through rapid changes and growth. But with the battle already won, the need for product innovation is gone. Microsoft may very well have deep pockets and control of the desktop, but Live Search lacks the traffic to be a true competitor – and they also seem to have diverted their attention elsewhere – at least in the short to medium term.

A lack of competition also means that advertisers are likely to pay more for each click. Advertisers will be forced to pay for Google, rather than the cheaper Yahoo! rate & without an alternative, the Google monopoly will mean that they can increase their charges as and when they like! Whilst this is great for Google & the Yahoo! shareholders, it is not great for anyone who is already struggling to make a return from PPC marketing.

Whilst a combined Yahoo!/Microsoft might not have been perfect, it at least would’ve provided competition for Google, benefiting advertisers and searchers alike.

With the small advertiser being frozen out of PPC markting by the big players with big budgets, it looks like search engine optimisation & high natural search engine listings will be even more important for affiliate marketeers!!!