Microsoft’s failed bid to overtake search engine Yahoo! this week has conjured up tons of coverage, mostly focused on the financial terms of the deal and what such a deal would have meant to each corporation’s shareholders.

Billions here, billions there. Let’s re-focus on the why for now, and for a moment, forget about the how.

Google is and has been blowing the socks off of fellow search engines for years. Its share of the US search market is 58.7% according to Nielsen Online in March 2008. Since Google is providing paid listings to users on both Ask and AOL, we’ll call Google’s share 65.2%.

That means that, as an advertiser, your PPC marketing campaigns that are run through Google’s AdWords platform will put your ads in front of nearly 2/3rds of ALL search engine queries in the US.

A Microsoft take over of Yahoo would result in a 20.1% market share, leaving Micosoft well behind Google in both market share and, ultimately, ad revenue.

And ad revenue, make no mistake about it, is what Microsoft is after.

Being a search engine marketing agency, we’re in this “stuff” everyday. We constantly see search engines announcing new widgets, add-ons, and upgrades to their PPC ad platforms, new tools for webmasters, and more integrated features for search engine users.

So long as the advertisers know where to get the biggest bang for their advertising dollar, widgets and upgrades won’t make a difference!

Microsoft needs to get the Yahoo deal done! Make the best online advertising platform you can Microsoft, then work on gaining market share.

Competition would be healthy for the search advertising game. That competition won’t come until Microsoft finds a way to increase market share. While Microsoft and Yahoo battle it out for their shareholders, Google will have more time to diversify its online advertising offerings, finding better ways for advertisers to reach their audience, and ultimatey, make more money.