Not two hours after announcing the end of merger negotiations with Microsoft, Yahoo said it had reached a deal to carry Google search ads on some of its results pages in the U.S. and Canada.
The deal is an expansion of a two-week test undertaken earlier this year, and a tacit acknowledgment that those tests had proved Google could monetize its search inventory far better than Yahoo’s year-old Panama search advertising platform. Even so, Yahoo stressed the deal is non-exclusive and it will continue to monetize ads through Panama and “other third parties.”
The move is a painful concession for Yahoo, which has invested years and untold development resources in Panama. Its hand was forced by shareholder outrage over CEO Jerry Yang and his board’s decision to spurn Microsoft’s $33 per share offer, which valued Yahoo at a 72 percent premium over the company’s market value at the time.
According to its statement, Yahoo expects to earn additional cash flow of $250 million to $450 million within a year of implementing Google’s ads on its pages.
“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 in a statement.
Under the agreement, Yahoo will carry ads purchased by Google advertisers on terms and results pages of its choosing. It may also carry Google ads on non-search pages. The agreement lasts for up to four years, and consists of an initial four-year term followed by options for two three-year renewals.
Some have speculated a Google-Yahoo tie-up on search advertising could create a virtual monopoly for Google. According to Nielsen Online, Google already controls nearly 70 percent of the search ads market.
Google and Yahoo said they will delay implementing the agreement for up to three and a half months while the U.S. Justice Department reviews it.
A class action lawsuit against an internet-connected pleasure device highlights the potential pitfalls a growing number of companies will face as they embrace ... read more
Google sparked a small firestorm last week as reports surfaced that its intelligent assistant device Google Home delivered an unsolicited advertisement to unsuspecting owners.
According to Internet Retailer's newly released The Best Digital Marketers in E-Commerce report, Target is the most effective marketer in online retail. So why is it struggling overall?
The rise of YouTube and digital video generally has a lot to do with the rise of the internet and the abundance of digital video content. But YouTube's ascendency is also the result of Google's savvy use of algorithms.