Will the Google counterattack be successful?

With new advertising systems launched by both Yahoo! and MSN, the war is afoot now. The counterattack on Google has started. It remains to be seen if these efforts -- which may be too late -- can take away some of that lucrative revenue Google enjoys and drop it into the coffers of Yahoo! and Microsoft. To put this into perspective, this article from BusinessWeek mentions a stat from eMarketer that is quite an eye-lifter about those small Google text ads that show up every time a search is performed: "These tiny text ads, usually no more than a dozen words in length, generated more than $10 billion last year and are expected to top $14 billion in 2006." Whoa. Those little text ads are worth more than many S&P 500 companies.

What can Yahoo! -- which has feverishly worked on a similar product to Google's, and was helped tremendously by the Overture acquisition a few years ago -- do to capitalize? It was there with Overture at the same time Google was using search to monetize its business model. But Google's model of bidding and relevancy won the day -- and garnered the lion's share of the market (and the money). The keyword here is relevancy -- apparently customers don't mind Google's text ads since they are so relevant to what they are seeking -- not simply another non-targeted ad that gets blown off.