The leading global Internet brand and one of the most trafficked Internet destinations worldwide, Yahoo! has announced an advertising partnership with Google, which enables Yahoo! to run ads supplied by Google AdSense for Search and AdSense for Content services next to Yahoo!’s internally generated paid search and algorithmic search results.



Furthermore, Yahoo! and Google will enable interoperability between their respective instant messaging services, aiming to bring easier and broader communication to the users.

“We believe that the convergence of search and display is the next major development in the evolution of the rapidly changing online advertising industry,” said Jerry Yang, CEO and co-founder of Yahoo!. “Our strategies are specifically designed to capitalize 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.”

According to the press release, “Yahoo! believes that this agreement will enable the Company to better monetize Yahoo!’s search inventory in the United States and Canada. At current monetization rates, this is an approximately $800 million annual revenue opportunity. In the first 12 months following implementation, Yahoo! expects the agreement to generate an estimated $250 million to $450 million in incremental operating cash flow.”

“This agreement provides a source of funds to both deliver financial value to stockholders from search monetization and to invest in our broader strategy to transform display advertising and advance our starting point objectives with users,” said Yahoo! President Sue Decker. “It enhances competition by promoting our ability to compete in the marketplace where we are especially well positioned: in the convergence of search and display.”

“This commercial agreement provides Yahoo! with the opportunity to deliver more relevant ads to users and provide advertisers and publishers with better advertising technology to help them succeed in their own businesses,” said Eric Schmidt, Chairman and CEO of Google. “This agreement will preserve the competitive and dynamic online advertising space.”

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