Yahoo has confirmed a Wall Street Journal report that it will be testing Google’s paid search ads alongside its own for the next two weeks and involving no more than 3 percent of Yahoo’s search pages in the United States. From the Yahoo statement
Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, announced today that it will begin a limited test of Google Inc.’s AdSense for Search service, which will deliver relevant Google ads alongside Yahoo!’s own search results. 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.
As previously announced, Yahoo!’s board of directors is exploring strategic alternatives to maximize stockholder value, including exploration of potential commercial business arrangements. The Company noted that the testing does not necessarily mean that Yahoo! will join the AdSense for Search program or that any further commercial relationship with Google will result. The Company further stated that it would not comment on the nature or timing of any potential relationship.
“AdSense For Search,” by the way, is the official name for Google’s paid search ads that appear on other search sites. (AdSense For Content is the name of the contextual product; AdWords is the name of the program advertisers use to buy any type of AdSense placement. The names are all confusing, but don’t blame us.)
Why would Yahoo do this? Reportedly, Google’s ads generate more revenue and Yahoo may have areas where they have limited search ad inventory for specific queries. This may lead to a "broader search ad outsourcing arrangement" between Google and Yahoo.
Moreover, if it does generate more revenue for Yahoo, it could potentially be another weapon to keep Yahoo out of the hands of Microsoft. Can Google Save Yahoo By Taking Over Search? from Danny in February looks further at the idea of how a Google deal might help Yahoo.
Microsoft has responded by suggesting any deal might come under regulatory challenge. However, this overlooks the fact that in the past, partnerships were used by Overture (now Yahoo) to gain huge paid search marketshare without opposition.
Microsoft: Forget It On Paid Search Partnership, Google & Yahoo from Danny today has more about the Microsoft response and any regulatory issues that might come up.
For further discussion, see related articles at Techmeme.