Chasing Google, they'll still be chasing Google

It's the biggest acquisition Microsoft has ever attempted and the biggest ever to hit the online ad business. But what's most surprising about the software giant's bid late last week for Yahoo is how little the $44.6 billion merger would change internet advertising -- at least in the near term.

The deal certainly helps Microsoft close the ever-widening share gap in the all-important but fast-growing search market; shore up its display business at a time when the big money advertisers are still hooked on scale; and create all sorts of back-end efficiencies in the form of engineering and infrastructure investment. Perversely, given that it would unite the Nos. 2 and 3 players in the market, a merger would at least offer advertisers a sizeable search alternative to Google, and therefore is being portrayed by Microsoft as an increase in options for advertisers. "Today the market is increasingly dominated by one player," said Kevin Johnson, president-platforms and services at the Redmond, Wash.-based Microsoft. "By combining assets, we can offer a better choice [for consumers, advertisers and publishers]."

But consider: Microsoft and Yahoo consolidated would manage to net only half of Google's search share in the U.S. -- and internationally that number is even smaller. And their combination wouldn't actually cut into the monster search share Google already has.

The merger could also provide advertisers with a broader suite of online ad offerings and allow them to better integrate their search ads with display, video and even in-game units. In theory, at least, the combination of those formats allows marketers to influence consumers' opinions about a product or brand, create demand for that brand and fulfill or track that demand through a transaction such as a search. It also allows them to measure and attribute the value of the different types of ads consumers encounter on the path to a purchase -- for example whether John Doe has seen a display ad, and is then prompted to search for the product advertised.