As Yahoo learned with Yahoo Answers, presenting algorithmic search results with those offered by real-life humans is a challenge. That same challenge exists in blending algo results with those from Twitter and Facebook. As more content sources begin to become part of a one-box search experience, presenting them to consumers in a navigationally simple UI, will take the search world 10 blue links to 100 blue links. Lastly, I can see the merits of digging meaningful nuggets out of Twitter but still don’t understand what Facebook updates provide as value-add to search results. When I type in the search query “health clubs” do I really want to know that someone on the other side of the globe is at his health club? As my teenaged daughter would say, that’s TMI.

The deal is another chapter in the Yahoo-Microsoft-Google marketplace drama. Various permutations of deals between Yahoo! and Google and Yahoo! and Microsoft have been discussed since Microsoft made a public offer to acquire Yahoo! in 2008. This deal does not include any upfront cash to Yahoo! although, according to Yahoo!, this agreement will provide a benefit to annual GAAP operating income of approximately $500 million and capital expenditure savings of approximately $200 million. Yahoo! also estimates that this agreement will provide a benefit to annual operating cash flow of approximately $275 million.

For Microsoft, the deal is a positive indication that it’s investment in search and launch of Bing in June will pay off. While no solid marketshare numbers have surfaced, Microsoft has created positive momentum and it’s that traction that gave Yahoo! the indication it would need to invest heavily in search to remain competitive with Google and Microsoft. By making the pragmatic decision to cede its search technology to Microsoft, the company effects a potential $700 million swing and shows management is able to make tough decisions.

The fine print on the deal continues to be brought into greater relief, but some key questions have been raised:

Yahoo! has put a significant amount of time and energy into its open search strategy, namely BOSS and Search monkey. According to Microsoft, that platform will fall under its umbrella which leaves developers and publishers to question the future of both efforts as well as their desire to work with Microsoft.

While some contend regulatory issues may not be a major hurdle here, Microsoft is a lightning rod for attention from governing bodies in both the U.S. and Europe. Yahoo! and Microsoft represent the two largest consumer web portals in the world, and portals (as well as their toolbars) are starting points for consumer search queries.

How will Yahoo! sell its search deal to affiliates currently powered by Yahoo’s search engine once the deal in done?

How much time, effort and expense will Google put into throwing roadblocks that stall the deal? Google, the jilted groom in a proposed Yahoo! deal in 2008 has, according to reports, shown some anxiety of Microsoft’s newly found search momentum.

Publicly stating it will be going through a brand refresh in 2009, how will Yahoo! position itself with advertisers, consumers and Wall Street having relinquished one of its key product and services pillars.

What about the future of search-display convergence, which was cited as a key principle in Yahoo!’s rejection of earlier overtures from Microsoft? Search-display convergence, which implies the use of search data to better target display ads, is a key battleground for Google as it seeks to extend its advertising business into rich media and beyond.

One question that’s been raised that may be less important is whether the Microsoft-Yahoo! combination will significantly move needle on search share. Microsoft and Yahoo! together handle about 28% of the world’s searches, as compared with Google’s 65%. However, this question overlooks the strategic challenge that this deal represents. By dividing the search advertising market between premium buyers and self-service “long-tail” advertisers, Microsoft achieves a kind of pincer move around Google, challenging it directly on its home turf of self-service AdWords (it’s primary source of revenue) while empowering Yahoo! to block its expansion into the higher end of the market, the premium advertisers, where search and display convergence (along with mobile and social and online video and next-generation television) are important. In other words, this sharpens the distinction between Microsoft’s “technology company” role and Yahoo!’s “media company” role, making it harder for Google to play both against their alliance.

For advertisers, such escalating competition spells opportunity. AdWords users may now find AdCenter to be a more competitive option, especially in categories where Microsoft has focused Bing’s development like travel and retail, while premium brands and agencies may now find Yahoo! to be more capable of supporting brand campaigns with integrated search and search-related targeting capabilities. The fly in that ointment remains the privacy issues that will impede the flow of search data between the two companies. Watch for this issue to escalate in the inevitable challenge from Google.

I fail to see the wow. The primary change on the home page is a customizable rail/column that allows the consumer to add his or her favorite pages/sites/social networks to provide a one-stop panoramic snapshot of everything that’s important in one’s world. The truth is, customization works best if those sites you want to add are either Yahoo properties or those (such as All Things Digital) who have formatted their content for customizable viewing. The “apps,” as they are called, are in three flavors: Yahoo sites, partner sites (or perhaps those who have worked to make their content suited for preview) and your favorites. A box allows individuals to add their favorites to the front page, but adding my blog and Twitter resulted in a major fail as these personalized add-ons failed to load previews. Adding Facebook, which looks to be pre-programmed, kept giving me a message to log in, but even after logging in, it didn’t work. Makes me wonder if others are having the same issue.

Beyond the customizable issues, why can’t the search box at the top of the page be customized so I can focus on the categories I search most: videos, blogs, news. I’d like to move image search off the main window and add one of my own preferences. And what’s with that little box at the top next to my name that asks for my status? Who sees that, and how do I see others in my network? And, lastly, if Bartz says that video is important to Yahoo, why isn’t there a single video window on the new homepage?

There’s wow and then there’s WOW. In the case of Yahoo’s new homepage, I think it falls short of both.

The cognoscente’s meme of the day is whether or not harsh words on Twitter cut off Sasha Baron Cohen’s “Bruno’s” U.S. box office hopes at the knees. Time’s noted film critic Richard Corliss believes that a decline in opening day revenue to the following day was due in part to bad cyberword of mouth. That is, a flood of movie going Tweeters expressed less than favorable reviews of the film. Given the fact that the average filmgoer cares less about what professional critics say and more what their friends tell them, bad word of mouth can be especially damaging when it is shared in real time. In the old days (maybe 15 years ago) a crummy movie could make it through the weekend with box office intact until folks met at the water cooler on Monday morning.

Pundits who have an excessive amount of time on their hands are combing through Twitter logs to validate or nullify this theory. I believe even if there is a kernel of truth to the “Bruno” mess, there’s a great lesson to be learned for anyone who has a product or service to market or sell: in the Web 2.0 world, a marketing campaign only starts once a product is released. Understanding social buzz and (more importantly) knowing how to react will give new life to the phrase “expect the unexpected.” All the social media monitoring tools and services won’t do a film studio or soft drink company one iota of good if they are not equipped to respond to bad worth of mouth with some agility.

Anyone can plan for success; planning for disaster is another thing. As Monty Python says, “No one plans for the Spanish Inquisition.” Somehow, I sense “Bruno” may be up there with an inquisition.

No argument with closing down Geocities. In fact, in a recent internal research call, we asked on another if anyone knew if Geocities was still around. That says it all. Geocities was neither fish nor fowl in that it not as easy to set up as a blog and not as robust or valuable as a simple templated Web page with its own domain hosted by a low-cost provider such as Go Daddy. Yahoo’s efforts to spin Geocities from a loosely formed community into a revenue-generating business failed around 2001 when members rebelled against migrating from free to paid hosting model. From that point on, Geocities lost its mojo as web community. From the spin control POV, Yahoo must devise a way to placate those (according to compete.com) 13 million users who visited Geocities in March.

Cup half full: shutting down underperforming businesses is proof that Bartz is prepared to make the difficult decisions needed to get Yahoo back on its feet. Cup half empty: Such moves may be too little too late. Cup status undecided: What major product news will Yahoo make to showcase its ability to see in the future while fixing past mistakes?

The energy is powerful and pure—that’s the only way I can describe it. Reminiscent of the early days of Internet World (not Interactive World, as I say in the clip below), it’s a mix of big names–Adobe, Microsoft, etc.. and no-names (meant as a compliment) mixing together in the same powerful crucible.

The clip below features a very tired (and some raggedly looking) yours truly giving his opening impressions. I shot it using my Quickpod which allows you to shoot videos (and take pictures) of yourself with a tripod-like Gizmo. More videos to come.

The new structure speaks to Bartz’s former role as head of Autodesk, a software publisher, and her work at Sun Microsystems where a more centralized organization led to fewer layers of bureaucracy and more consistent decision making. This move is Bartz’s clear statement that she is not only in control, but she views information as power and places her in a prime position to be at the center of an ongoing informational hub. For Yahoo!, it marks the end of labyrinth of roles within products, technologies and marketing and ushers in a model of greater individual accountability (not to mention public and behind-the-scenes sniping). In addition, Yahoo spokespeople say Bartz was appalled at the way Yahoo interacted with its customers and is creating a new Customer Advocacy group whose head (yet to be named) will gather customer insights and synthesize them for use across the organization.

Specifically, the new org structure looks like this:

• Tech and Product groups will be combined to create a single organization called Products. Products will be led by Ari Balogh as EVP of Products and CTO, reporting to Carol Bartz. This organization is responsible for the vision, strategy, and quality of every product we create — regardless of region, device format or category.

• Instead of multiple regions, there will be now two regions – North America and International. The regions are responsible for delivering Yahoo!’s products, programming and services to consumers, partners and advertisers in local markets. North America will be led by Hilary Schneider, EVP, North American Region, reporting to Carol Bartz. International’s leader will be hired soon.

* In mobile, David Ko will lead the mobile business, strategy and monetization teams for Yahoo! (Head of Global Mobile Business, reporting to Hilary Schneider).

• A Chief Marketing Officer (CMO) role has been created to oversee global marketing strategy and provide direction for our marketing function. The new CMO is Elisa Steele who was most recently with NetApps.

It’s worth calling out the deletion of regions and sub regions in the corporate structure. Only 30 percent of Yahoo!’s revenue comes from outside the U.S., so the company believes viewing their opportunity as two regions will allow them to have more uniform product messaging and product deployment. And while not a headline grabber, Yahoo! is creating a centralized Service Engineering & Operations (SE&O) team which will be chartered with delivering common technology services at scale, including application management and infrastructure. This should not only result in a cost savings but will allow the company to be more agile with a single point of internal technology governance.

Yahoo! followers are doing a light head scratch over the choice of Elisa Steele as CMO, wondering how a career at NetApps provides the expertise to work at Yahoo!. One school of thought would say marketing principles are uniform from one market to another; the other would be that there was a possible prior working relationship between Steele and Bartz during their time at Sun Microsystems. Also somewhat dampening the reorg message is the departure of Blake Jorgensen, Yahoo!’s CFO. Finding a suitable replacement will be crucial to keep Wall Street engaged and a believer in the company’s new direction.

So, what’s next? It would be great to be a fly on the wall in the Yahoo! cafeteria to gauge how the rank and file feels about the news. Yahoos should be glad to have a clearer, cleaner chain of command with management empowers rather than confuses its minions. The tale will not be told, however, until this shakeup actually results in some quick, market-changing offerings that gets everyone yodeling again.

While some newspapers are considering moving from print to online, that will be tricky here. If I am not mistaken, Philly.com is a separate business unit from the Inquirer and Daily News and there would be both business, personnel and technology issues at play for a total conversion from print to web.

I am left with one question (raised by my wife, an MBA who is not from Philadelphia) that is with my head and not my heart: If they are bailing out banks and car companies, why not newspapers? I have no easy answer.

It’s a smart move for TypePad; once these journalists either go back to full-time jobs or reach levels of success independently, guess whose content management products they will buy?