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Yahoo’s Hilary Schneider and Microsoft’s Yusuf Mehdi spent months making today’s search and advertising deal happen — and they’ll spend countless hours making it work. In between, they spent some time explaining to paidContent’s Staci D. Kramer, David Kaplan and Joseph Tartakoff some gaps like display advertising; some details, including whether the Newspaper Consortium will use Bing; and what this might mean to AOL (NYSE: TWX) and MySpace. Mehdi is SVP of the Online Audience Business Group at Microsoft; (NSDQ: MSFT) Schneider is EVP of Yahoo (NSDQ: YHOO) North America. An edited transcript of the interview follows; their explanation about why mobile search isn’t exclusive as part of the deal can be found on sister site mocoNews.net.
Staci D. Kramer: Why isn’t display advertising part of this?
Yusuf Mehdi: We wanted basically to be able to keep it simple while deriving a lot of value. We think the focus on paid search in particular really did create a lot of value and was something we could effectively bite up and chew in the first go round to implement. We feel very good about that piece and the opportunity. I think there’s a lot of value to create in that area.
Hilary Schneider: I think the other way to think about it is we do believe in the KISS theory — keep it simple. It’s better to walk before you run, run before you fly. I would say adding display, to use one of Carol’s favorite words, it adds boatloads of complexity. It’s boiling the ocean. This is absolutely the right deal for us to do today.
Staci D. Kramer: Are you concerned at all about getting stagnant in the next year while this in progress — even before the approval, of stopping innovation, of creating roadblocks inside your own company?
Hilary Schneider: I would say, from our perspective, we’re full speed ahead on everything we’re currently doing up until the point that we get approval. We have a current product roadmap, current go-to-market plans. There’s nothing about this announcement that will put any decelerator on what’s currently in place, both on the ‘algo’ innovation side, what we’re doing to ensure we’re continuing the really nice growth in query volume we’ve seen over the last couple of quarters and also on the paid search side. At the same time, we are hoping to quickly integrate once we do get approval.
Joseph Tartakoff: Which of Bing’s user interface features do you see coming to Yahoo search or being added to it?
Yusuf Mehdi: The way we’ve constructed the partnership is we’re effectively providing to Yahoo an API of the text, image and video that powers all of the results in the same parity that we provide for ourselves. Then over time what we do is we add value on top of that to things like shortcuts, answers or applications if you will, like search history. As we put more and more into our API, Yahoo is going to get full access to all of that. Then they retain the flexibility to add and build on top of that and build their own user experience. They can build their own local applications. They can do their own user experience experimentation and we will share in that and learn [from] that to then fold it back into the overall platform.
Hilary Schneider: It was important to Yahoo to retain full flexibility over the user experience because it’s integral to the overall user experience at Yahoo and the way we think about search and discovery horizontally across the sites and services we deliver. Our innovation is going to be associated with how we integrate, and deliver with relevance, unique content that we have. If you think about Flickr, Answers