Microsoft Corp. doesn’t plan to raise the price of its $44.6 billion takeover bid for Yahoo, Inc. but it is about to make it a lot harder for CEO Jerry Yang to wiggle out of the software giant’s embrace, according to reports today.

Microsoft has authorized a proxy battle for Yahoo this week, in a bid to lure the Web company’s shareholders into Microsoft’s camp. And if Yahoo doesn’t enter talks with Microsoft, the company will seek to nominate a new batch of directors to Yahoo’s board by March 13 – and oust the old board in the process, The New York Times reports.

The battle is expected to cost Microsoft between $20 million and $30 million, a much cheaper alternative to raising its bid. Upping the $31-per-share offer would cost Microsoft an additional $1.4 billion for every dollar added. Yang rejected the initial overture as “not in the best interests” of stockholders, saying the company is “uniquely positioned” to grow from $45 billion in 2007 to $75 billion in 2010.

Microsoft has watched its stock plummet 12.8% since the Feb. 1 bid and major Yahoo and Microsoft shareholders have questioned the deal’s merits and future and offered conflicting advice to the companies.

Leading stock-picker Bill Miller of Legg Mason, Yahoo’s second-biggest investor, said Microsoft should up its offer to reach a deal. Fund manager Robert Olstein, who owns 1 million Microsoft shares, wrote a letter to chief financial officer Chris Liddell that said, in part, “Under no circumstances should you raise your price,” The Guardian reported yesterday.

On Monday, Microsoft’s chairman Bill Gates told Reuters there was “nothing new” in the takeover process and that its initial offer was “very fair.”

Because Yahoo doesn’t have a staggered board, it is vulnerable in a proxy battle. All of the Internet company’s directors are up for nomination this year, The Times notes. And in a contested election, directors are elected by a plurality of votes cast.

Even more ominously, the very nature of this kind of heated and protracted skirmish will likely lead to a big body count at Yahoo, industry professionals anticipate. It is likely that Yang and other top executives will lose their jobs should Microsoft come out on top.

It is being reported that Yahoo may be considering a business partnership with Google as a tactic against the $44.6 billion offer from Microsoft, a source told Reuters this weekend.

The firm believes that the bid undervalues the company and as an option, may be looking to revisit talks previously had with Google about a business partnership.

A memo to Yahoo employees on Friday was obtained by Reuters this weekend in which management wrote “We want to emphasize that absolutely no decisions have been made – and, despite what some people have tried to suggest, there’s certainly no integration process underway.”

It was reported in The Wall Street Journal that Google CEO Eric Schmidt called Jerry Yang to offer any help needed to kill Microsoft’s offer.

Regardless of who may gain any kind of upper hand on Yahoo: Microsoft or Google; either company will have a hard time going through anti-trust regulators as these three companies are the largest in the search and now online advertising business.

The effort being made b Yahoo to find an alternate bidder is also being speculated to be a tactic that could pressure Microsoft into offering more money. Jeffrey Lindsay, analyst for Sanford C. Bernstein was quoted in Reuters for having written in a research note that “the Microsoft bid of $31 is very astute,” adding that the true value could be worth upward of $39-$45 a share.

As rumored in our recent newsletter “Is Yahoo a Buying Opportunity” Microsoft this morning has made a bid to acquire Yahoo at a 64% premium to Thursday’s closing stock price to represent a $44.6 BILLION value, which is projected to be over a 30X EBITA multiple offer on projected 2008 earnings. Microsoft will allow Yahoo investors to accept stock or cash. Many expected that with the stock price now so low and recent layoffs that Microsoft would not be interested in the company, but as rumored by sources deep inside Yahoo, there is significant history between Yahoo and Microsoft.

Terry Semel, former CEO of Yahoo, and Microsoft entered talks in late 2006 and continued to discuss an acquisition until Feb 2nd, 2007 when a letter was sent by Semel to Microsoft explaining that Yahoo didn’t feel it was the right move at this time. Analysts speculate that Yahoo saw more potential value than was being offered at that time. With Semel out and Jerry Yang in things changed. With the current battering of the price to as low as $18 a share, Microsoft has aggressively moved in an pulled a Murdoch by offering a premium price that is unlikely to be challenged by another. Some sources say that the bid could go as high as $40 a share.

Yahoo has had a tough year in 2007 with slipping search share, drastic loss of senior management, declining profits, and media attention focused on praising Google. It has made some bold moves in paying high acquisition premiums such as Right Media in order to stimulate change and growth inside the organization. However the stock price continued to slide and broke the $20 barrier last week.

Adotas will keep you updated on the unfolding events related to the acquisition as the day moves on.

$44.6B

On January 23, Google’s Inside AdWords Blog announced a beta test where advertisers will now be able to demographically target their ads to an audience of a certain age group or gender. Demographic targeting, however, only works for the content network and placement targeting – not for the Google search engine or for the search network. This means that your demographically targeted ads do not appear on Google, but rather third-party websites, like MySpace.

There are only 24 websites offered as part of the beta program, ranging from well-known social networking sites like MySpace, Friendster possibly lesser known sites like CupidBay. Many, if not all, of these sites require online registration, which likely means that each website already maintains a database of demographic data about each user. Google then uses that demographic data to serve ads based on certain demographic criteria set by the advertiser.

While the Google demographic beta test is a welcome innovation for Google AdWords, there’s still much work to be done for demographic data to be integrated into the Google ad platform. Recently, there’s been a lot of discussion about search engines and their interest in Facebook and its advertising platform, which allows advertisers to target by age, interest and geographic location. On October 24, Microsoft invested $240M in Facebook – most likely to gain access to its advertising potential. Facebook, however, isn’t the only social networking site that allows demographically-targeted advertising based on gender, age, likes, and more. Other social networking sites, such as LinkedIn, allow advertisers to target their ads to an audience with a particular job title or job focus.

What is the benefit that these social networking sites have for the online advertising medium of PPC? PPC is immensely popular because advertisers only pay when its audience takes an action. Couple that with the power to ensure that your message reaches a very targeted audience and you’ve created a powerful advertising platform.

The potential is there for Google to eventually offer demographic targeting for ads served on its own search engine, instead of just through third-party sites. Google already is experimenting on its engine with “personalized search” – a way to serve more personalized organic search query results based on a user’s past search history. Personalized search hasn’t exactly taken off yet – but that may be due in part to the fact that personalized search does not include demographic data or preferences, which might give it more power.

Many AdWords advertisers have very specific demographic requirements for their advertising, and, for now, the only way to effectively target a certain demographic for ads served with Google searches is to pick very specific keywords or to set geographic targeting. This can really hamper an advertiser’s ability to reach its core audience – a problem that could be solved with demographic advertising for Google searches.

For example, recruiting firms might select the keyword “recruiting firm” as an AdWords keyword. However, both potential employers and candidates search for recruiting firms using this keyword. Why is that a problem? Recruiting firms don’t want to pay for clicks made by candidates looking for jobs. Candidates are more prevalent than potential employers, and candidates do not pay recruiting firms (in many cases) to find a job. So many recruiting firms really only want to target potential employers, focusing their advertising only to the audience that will generate revenue. Now imagine that the job data from LinkedIn were combined with that search term, allowing the recruiting firm to advertise, perhaps, to only HR professionals who search for the term “recruiting firm.” That combination would yield a much higher possibility of conversion and return on investment for the advertising recruiting firm.

I applaud Google for taking the first steps to offer demographic advertising in AdWords, but demographic advertising on the search engines has much more potential.

For a while now webmasters have fretted over why all of the pages of their website are not indexed. As usual there doesn’t seem to be any definite answer. But some things are definite, if not automatic, and some things seem like pretty darn good guesses.

So, we scoured the forums, blogs, and Google’s own guidelines for increasing the number of pages Google indexes, and came up with our (and the community’s) best guesses. The running consensus is that a webmaster shouldn’t expect to get all of their pages crawled and indexed, but there are ways to increase the number.

PageRank
It depends a lot on PageRank. The higher your PageRank the more pages that will be indexed. PageRank isn’t a blanket number for all your pages. Each page has its own PageRank. A high PageRank gives the Googlebot more of a reason to return. Matt Cutts confirms, too, that a higher PageRank means a deeper crawl.

Links
Give the Googlebot something to follow. Links (especially deep links) from a high PageRank site are golden as the trust is already established.

Internal links can help, too. Link to important pages from your homepage. On content pages link to relevant content on other pages.

Sitemap
A lot of buzz around this one. Some report that a clear, well-structured Sitemap helped get all of their pages indexed. Google’s Webmaster guidelines recommends submitting a Sitemap file, too:

· Tell us all about your pages by submitting a Sitemap file; help us learn which pages are most important to you and how often those pages change.

That page has other advice for improving crawlability, like fixing violations and validating robots.txt.

Some recommend having a Sitemap for every category or section of a site.

Speed
A recent O’Reilly report indicated that page load time and the ease with which the Googlebot can crawl a page may affect how many pages are indexed. The logic is that the faster the Googlebot can crawl, the greater number of pages that can be indexed.

This could involve simplifying the structures and/or navigation of the site. The spiders have difficulty with Flash and Ajax. A text version should be added in those instances.

Google’s crawl caching proxy
Matt Cutts provides diagrams of how Google’s crawl caching proxy at his blog. This was part of the Big Daddy update to make the engine faster. Any one of three indexes may crawl a site and send the information to a remote server, which is accessed by the remaining indexes (like the blog index or the AdSense index) instead of the bots for those indexes physically visiting your site. They will all use the mirror instead.

Verify
Verify the site with Google using the Webmaster tools.

Content, content, content
Make sure content is original. If a verbatim copy of another page, the Googlebot may skip it. Update frequently. This will keep the content fresh. Pages with an older timestamp might be viewed as static, outdated, or already indexed.

Staggered launch
Launching a huge number of pages at once could send off spam signals. In one forum, it is suggested that a webmaster launch a maximum of 5,000 pages per week.

Size matters
If you want tens of millions of pages indexed, your site will probably have to be on an Amazon.com or Microsoft.com level.

Know how your site is found, and tell Google
Find the top queries that lead to your site and remember that anchor text helps in links. Use Google’s tools to see which of your pages are indexed, and if there are violations of some kind. Specify your preferred domain so Google knows what to index.