Yahoo has shunned a deal that would have formed a
web-ad partnership with Microsoft and has instead opted to
partner with Google.
The agreement enables Yahoo to run ads supplied by Google
alongside Yahoo search results and on some of its web properties in
the US and Canada.
The agreement is non-exclusive, giving Yahoo the ability to
display paid search results from Google, other third parties, and
Yahoo's own Panama marketplace.
Yahoo will define its users' experience and will determine the
number and placement of the results provided by Google and the mix
of paid results provided by Panama, Google or other providers.
The agreement applies to paid search and content match and does
not apply to algorithmic search. The agreement also applies to
current partners in Yahoo's publisher network.
Yahoo CEO and co-founder Jerry Yang said, "We believe that the
convergence of search and display is the next major development in
the evolution of the rapidly changing online advertising
industry.
"Our strategies are specifically designed to capitalise on this
convergence, and this agreement helps us move them forward in a
significant way. It also represents an important next step in our
open strategy, building on the progress we have already made in
advancing a more open marketplace."
Yahoo said the agreement will enable the company to better
monetise its search inventory in the US and Canada. At current
monetisation rates, this is approximately an £400m annual revenue
opportunity, it said.
In the first 12 months following implementation, Yahoo expects
the agreement to generate an estimated £125m to £225m in
incremental operating cash flow.
Microsoft meanwhile, said any potential deal with Yahoo still
was not dead, even though Yang, apeing Microsoft CEO Steve Ballmer,
said his firm had "moved on".
When
Microsoft had its proposed takeover of Yahoo knocked back,
Ballmer said Redmond had now "moved on" and would not return with a
higher bid.
It did return to propose a partnership though, but has now been
pipped by Google.