Yahoo sought another way to stave off a Microsoft acquisition in opening a two-week deal with search advertising giant Google to deliver its AdSense for Search advertising.
Can a fortnight of Google fortify Yahoo? Jerry Yang and company hope so. Yahoo disclosed a deal that will bring a little bit of Google to Yahoo Search.
“The test will apply only to traffic from yahoo.com in the U.S. and will not include Yahoo!’s extended network of affiliate or premium publisher partners. The test is expected to last up to two weeks and will be limited to no more than 3% of Yahoo! search queries,” Yahoo said in a statement.
Over the past several months, some suggested the way for Yahoo to enhance its business in general would be to outsource search advertising to Google. Such a move could be worth billions to Yahoo, but Google likely faced antitrust scrutiny in such an arrangement.
The limited test allows the two companies to find out what other relationships, if any, they could pursue. Yahoo said it isn’t going to comment about any potential relationship with Google.
Microsoft did comment, and not in a favorable way. General counsel Brad Smith said a Yahoo deal gives Google 90 percent of the online search ad market. “This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo,” said Smith.
Time to discuss a bigger deal probably passed forever when ex-Yahoo CEO Terry Semel balked at a billion dollar price tag for Google years ago. Google’s fortunes soared with their IPO, while Yahoo’s business stagnated in search advertising.
It didn’t have to be that way, and the blame has to fall squarely on Yahoo for its current state. Where Google devoted itself to relevance in search and advertising, Yahoo allowed its search ads to be influenced by advertiser spend more than relevance to users.
