Microsoft-Yahoo tie-up garners ad chief support

The heads of the four largest advertising agencies came out on Monday in support of the proposed search engine alliance between Microsoft and Yahoo.

Their backing for the deal comes as regulators on both sides of the Atlantic are studying the partnership, which the two companies claim will create a stronger force in search advertising to counter market leader Google.

Their support came in a letter to the Department of Justice from the American Association of Advertising Agencies from Nancy Hill, the association’s chief executive officer. The letter was co-signed by Maurice Levy of Publicis Groupe, Martin Sorrell of WPP, Michael Roth of Interpublic and John Wren of Omnicom.

The brief submission did not go into detail about the dynamics of the search market or mention Google in any way, but argued that the alliance “enhances competition” and that it “should be allowed to take effect as soon as possible.”

The lack of any mention of how the alliance might counter-balance Google’s dominance in the search market appeared to reflect the different positions that the individual agency heads have struck in the past.

A year ago, when Google tried to forge an alliance of its own with Yahoo, Mr Sorrell spoke out strongly against the proposal, while Mr Levy backed the idea. The plan was eventually scrapped at the last minute after the DoJ signalled that it would sue to block it.

“We believe that Yahoo! and Microsoft’s proposal to combine their technologies and search platforms is good for advertisers, marketing services agencies, website publishers and consumers,” Monday’s letter read.

Google itself has remained on the sidelines, at least publicly, during the regulatory review of the alliance, having taken a strong position against the full acquisition of Yahoo that Microsoft tried to pull off last year.

Microsoft and Yahoo have said that they hope to complete their partnership by early next year. They have yet to file a notification seeking approval from the European Commission, and their small combined share in Europe has raised questions about whether they need formal approval from regulators there. However, a failure to anticipate potential objections from Brussels recently tripped up another prominent technology deal, when European regulators refused to issue an expected rubber-stamp for Oracle’s proposed acquisition of Sun Microsystems.