Google and Yahoo! entered into a four-year advertising agreement yesterday that will place Google AdWords on Yahoo! web properties in the United States and Canada. The agreement, which is renewable for two, three-year periods, gives Yahoo! the ability to display higher converting Google advertising in place of Yahoo! Search Marketing ads.
The terms of the agreement are non-exclusive, which allows Yahoo! to display advertising culled from any ad-network, including (if it wanted to), Microsoft’s AdCenter or its own Panama marketplace.
The agreement lets Yahoo! pick the search and pages on which Yahoo! might display Google advertising and even allows Yahoo! to mix and match ads pulled from AdWords and Panama. It does not extend into the realm of natural or organic search.
In a press release issued by Yahoo!, CEO 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 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.”
Another famous Yahooligan chimed in, “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”
According to the Yahoo! press release, the terms of the agreement are thus:
“The agreement will enable Yahoo! to run ads supplied by Google’s AdSensefor Search and AdSensefor Content services next to Yahoo!’s internally generated paid search and algorithmic search results. Yahoo may also run Google-supplied ads on non-search Yahoo web properties, as well as on current members of its partner network. The agreement has a term of up to ten years: a four-year initial term and two, three-year renewals at Yahoo!’s option. It applies to Yahoo!’s operations in the U.S. and Canada only. Advertisers will continue to pay Yahoo! directly for clicks served by Yahoo! from Yahoo!’s Panama and Content Match marketplaces. Advertisers will pay Google directly for each click on Google paid search results appearing on Yahoo! owned and operated network or certain affiliate sites. Google will share a percentage of such revenue with Yahoo!.
In addition, Yahoo! and Google agreed to enable interoperability between their respective instant messaging services, bringing easier and broader communication to users.
The agreement allows either party to terminate the agreement in the event of a change in control of either party. The agreement also requires Yahoo! to pay a termination fee if the agreement is terminated as a result of a change in control that occurs within 24 months. The termination fee is $250 million, subject to reduction by 50 percent of revenues earned by Google under the agreement.”
Anyone seeking more information on the Google Yahoo agreement can listen in on a recording of yesterday’s investors’ conference call by dialing, 888-286-8010 (reservation # 84138579).
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