Yahoo agencies mull business impact as Microsoft bid looms

SUNNYVALE, CA: PR firms that work with Yahoo are cautiously considering how business could be impacted by Microsoft's potential acquisition of the troubled company.

SUNNYVALE, CA: PR firms that work with Yahoo are cautiously considering how business could be impacted by Microsoft's potential acquisition of the troubled company. Yahoo's PR function is spread across several agencies, including OutCast Communications for its trade and business media outreach, Hill & Knowlton for its mobile applications, and Voce for some influencer outreach.

The search engine also recently consolidated consumer PR for its network division to GolinHarris, eliminating several smaller firms and charging Golin with the consumer-facing PR for its search components, media properties, homepage, communications applications, and community assets.

Yahoo did not immediately return calls about the acquisition's potential impact on agency work, but sources at some of Yahoo's firms said they're not yet panicking. The proposed takeover would likely take at least one year to complete, allowing them to prepare for the un- known by shoring up other revenue sources.

Additionally, several sources have said the search engine's distribution work across multiple agencies could dilute the damage done.

"We haven't really sat down and talked about [the acquisition] a lot," said one source who works with one of Yahoo's agencies. "Usually when these things happen, they take a long time, so it's not like tomorrow Yahoo will be gone."

A second source with another of Yahoo's firms said it is aware it could lose the account if Microsoft reorganizes Yahoo's agency relationships. But, the source added, its business with Yahoo constitutes just a fraction of the agency's revenue, so the loss would not be devastating.

A third source familiar with a Yahoo agency said that although Yahoo is a substantial account for the firm, there are several other accounts that rival its size, so there will be several opportunities for new business, especially as tech continues to be a hot PR market.

"I have to imagine Microsoft would run Yahoo as a standalone brand," noted the source, adding that Microsoft might be more open to using agencies outside its typical roster in an acquisition of this kind. Microsoft's firms include Waggener Edstrom Worldwide, Weber Shandwick, and Edelman.

PR firms are not alone in monitoring developments in one of the year's biggest business stories. Analysts have praised the communications efforts of the key players.

"Microsoft sounded some of the right notes early on," said David Schatsky, president of JupiterResearch. "[It] mentioned the $1 billion in cost savings it hoped to achieve, which was obviously for the ears of the investors; the increased competition, which was aimed at regulators and advertisers; and it praised the assets of Yahoo, including the brand and its people. [It also] struck a tone of inclusiveness, saying executives from both companies would be involved in integration planning."

Though the deal is far from completion, Schatsky suggested that Microsoft maintain the open lines of communication it has initiated.

"I'd advise them to do a survey of clients, partners, and other stakeholders in the industry to get a better feeling for how the deal is being perceived," he said. "It can use that information to shape strategy going forward. [Microsoft] identified some of the key issues early on and it can benefit from revisiting and elaborating [on them]."

Even Google, which struck a forceful note with its comments, didn't overstate its case.
"Google's response was notable for its aggression," added Schatsky. "I understand why it wanted to raise concerns about competition in the marketplace. It clearly is not a disinterested party."

Relatively quiet is the company currently in play - Yahoo.

"Yahoo has done very little - appropriately so," said David Graves, principal analyst for marketing and strategy at Forrester Research, who admitted a soft spot for Yahoo, having worked for it in the past. "There's not much more it can say. It will need to communicate thoroughly with stockholders and Wall Street when it decides."

Yahoo CEO Jerry Yang was proactive in his internal communications, reassuring and praising staff in two recent e-mails. Speaking to "fellow Yahoos," he thanked the employees for staying focused and emphasized that the decision was being made "thoughtfully and carefully" by the company's board.

"I've heard from many of you - from other friends and colleagues from around Silicon Valley and across the globe - that we need to do what's best for Yahoo and our shareholders," he wrote. "I promise you the board is doing that."

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