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Yahoo Partners with Google on Contextual Ads

Yahoo Partners with Google on Contextual Ads
February 7, 2013 10:28AM

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"This suggests [Yahoo CEO] Marissa Mayer's new thinking about advertising at Yahoo," said analyst Greg Sterling. "Google and Yahoo tried to create a search ads partnership years ago, which the U.S. was going to block because of Google's market share as anti-competitive." Following that, Yahoo and Microsoft entered into a search deal.

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When Yahoo drew its CEO from Google's high ranking executives, many expected sweeping changes. Perhaps fewer expected a partnership between Google and Yahoo.

Yahoo on Wednesday announced plans to start using Google's AdSense and AdMob services. The goal is to drive up sales from content on its Web pages. Yahoo is officially the largest Web portal in the U.S. and has plenty to gain from better monetization of the content.

"Every day, people turn to Yahoo for their daily habits -- like search, weather, news or more," the company said in a blog post. "At Yahoo, we're focused on doing everything we can to make the user experience inspiring and engaging. One way we do that is by providing relevant and well-targeted content -- whether that be editorial or advertising content."

How this Affects Users

Yahoo offered an example: shopping for boots. Yahoo reasonably figures if you see an ad for boots, that is instantly going to pique your attention more than an ad for a car battery. That's better for users, Yahoo said, and this is why contextual advertising is such a powerful tool.

Against that backdrop, Yahoo announced it recently signed a global, non-exclusive agreement with Google to display ads on various Yahoo properties and certain co-branded sites using Google's AdSense for Content and Google's AdMob services.

"By adding Google to our list of world-class contextual-ads partners, we'll be able to expand our network, which means we can serve users with ads that are even more meaningful," Yahoo said.

"For our users, there won't be a noticeable difference in how or where ads appear. More options simply mean greater flexibility. We look forward to working with all of our contextual-ads partners to ensure we're delivering the right ad to the right user at the right time."

How this Affects Yahoo

Greg Sterling, principal analyst at Sterling Market Intelligence, told us the arrangement was provocative.

"This suggests [Yahoo CEO] Marissa Mayer's new thinking about advertising at Yahoo," Sterling said. "Google and Yahoo tried to create a search ads partnership years ago, which the U.S. was going to block because of Google's market share as anti-competitive."

Then, Sterling noted, Yahoo and Microsoft entered into their search deal. He assumes there's nothing in that contract that prevents this deal on the display side. And, he continued, Mayer's history at Google obviously has something to do with this new Google relationship, which she hinted at earlier.

"On one level this could simply be a 'backfill' situation, in which Yahoo uses Google ads online and in mobile when it doesn't have its own ads," Sterling said. "But it also suggests a change in direction for Yahoo with respect to its Microsoft relationship as well."

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