Market participants welcomed the news, confirmed by Yahoo today, that it has signed a global agreement with Google to display its ads on selected Yahoo properties and co-branded sites.
The deal is non-exclusive, so Yahoo will also continue to display ads from competitors such as Microsoft's Bing.
"This is good for the community as a whole. Google AdWords is simply a superior platform," says Alex Fender, a Google-certified marketing consultant and president of Internet marketing company Funnel Science.
One of Google's main advantages over competitors is the sheer volume that comes through its site, he explains.
"For every 100 visitors to Google, there is one visitor to Bing. That's not enough traffic to drive sales," he comments of the latter.
The deal calls for Yahoo to supply Google with some of its unsold inventory in exchange for Google showing small business ads on Yahoo sites. The ads use Google's AdSense program to deliver contextually relevant ads to individual websites; publishers get paid based on user clicks or impressions. On Yahoo mobile sites, the contextual ads will be delivered via Google's AdMob mobile app.
"We work with a number of top publishers to help them monetize their content through AdSense for Content and AdMob. We're thrilled to now include Yahoo", said a Google spokeperson.
Yahoo said the deal would enable it to expand its network, so that users of its sites would see ads that were more meaningful to them.
"Say you've been shopping for boots. If you see an ad for boots, that's instantly going to pique your attention more than an ad for, say, a car battery. That's better for users," Yahoo noted in its statement.
Neil Krishnan, SEM analyst with Dana Communications, a Princeton, NJ based advertising agency, was also upbeat about the news.
"This is great for our clients. In our view anything that expands the reach of the Adsense network is great from a buyer's perspective. Yahoo represents a huge network of sites. It's also good for publishers in Yahoo's network. Google's deep stable of advertisers should ensure that Yahoo sites serve ads that are contextually relevant, which will increase visitor engagement, clicks and revenue."
Yahoo and Google were reportedly in talks for a more exclusive, formal arrangement with one another last year. But the deal never materialized after the company changed CEOs.
While Yahoo CEO Marissa Mayer, a former Google executive, may well be open to such a deal, some have speculated that might lead to antitrust concerns.
"Google already controls 85 percent of U.S. search traffic, and essentially has no competition," Fender said. "That is a matter for concern."