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Confidence lacking in Microsoft-Yahoo merger at online ad meeting

Attendees of the Interactive Advertising Bureau annual meeting say Yahoo and Microsoft may need each other but neither really knows what to do to beat Google.

Update at 1:40 p.m. with Microsoft comment

PHOENIX, Ariz.--A Microsoft-Yahoo merger may give the companies a better shot at competing with Google but it's still "the blind leading the blind," attendees at the Interactive Advertising Bureau annual meeting said on Monday.

Microsoft's takeover bid for Yahoo loomed in the background at the conference as Yahoo Chief Executive Jerry Yang dodged questions about it during a keynote question-and-answer session.

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Yang and Yahoo President Sue Decker tag-teamed for the morning keynote while Brian McAndrews, senior vice president for Microsoft's advertiser and publisher solutions group, announced a new ad campaign management tool in the afternoon and said Microsoft was still excited about the proposal. "Combined, we will be able to compete much better with Google," he said during a question-and-answer session following his speech.

In the halls and sunny patios of the Tapatio Cliffs Resort in north Phoenix, people were eager to talk about the possibility of a Microsoft-Yahoo merger, but only anonymously. That's because many of them feel that Microsoft and Yahoo may have missed the boat on online ads.

A combined company would be "the blind leading the blind," two attendees said separately. "They are both weak in their online ad strategies," said one of the men, who works for a Web publisher and services company. "If they can figure it out they will be in a better position to take on Google."

Several attendees sounded wistful at the notion that Internet pioneer and popular consumer brand Yahoo would get swallowed up by Microsoft.

"Microsoft has a history of absorbing companies and building monopolies," said one man who works for a Web publisher. "I would hate for Yahoo to fall into that maelstrom. ... It's time for Microsoft to stand up and show us they can build something on their own."

Clearly, something big needs to happen at Yahoo, people agreed. "Yahoo needs some kind of a kick, maybe a new owner," an executive at a content delivery company said.

An attendee who works for an ad agency said a Microsoft-Yahoo merger makes sense and would give the combined company momentum to compete against Google. "I don't want a Google-centric world," he said.

Google did not have an obvious presence at the IAB meeting as it does most other events. An executive from DoubleClick is scheduled to appear on a panel on Tuesday. Google's acquisition of DoubleClick has received approval from U.S. regulators but European regulators are still weighing in.

Referring to the consolidation in the industry--specifically "Google-Click" and "Micro-Hoo"--Tolman Geffs, managing director at investment bank Jordan, Edmiston Group, told the IAB audience: "It feels like a Japanese monster movie with figures crashing across the city."