Yahoo: Now Serving Better Ads… by Google

Yahoo! and Google today announced a non-exclusive AdSense for Search and AdSense for Content agreement. Omid Kordestani, Senior VP, Global Sales and Business Development spend a lot of time explaining on their blog what this deal is not about.

Defensive, aren’t we? Maybe because this partnership smell awfully like anti-competitive. Kordestani explains:

* This is not a merger. Rather, we are merely providing access to our advertising technology to Yahoo! through our AdSense program.

* This does not remove a competitor from the playing field. Yahoo! will remain in the business of search and content advertising, which gives the company a continued incentive to keep improving and innovating. Even during this agreement, Yahoo! can use our technology as much or as little as it chooses.

* This does not prevent Yahoo! from making similar arrangements with others. This arrangement is not exclusive, meaning that Yahoo! could enter into similar arrangements with other companies.

* This does not increase Google’s share of search traffic. Yahoo! will continue to run its own search engine and advertising programs, and the agreement will not increase Google’s share of search traffic.

* This does not let Google raise prices for advertisers. Google does not set the prices manually for ads; rather, advertisers themselves determine prices through an ongoing competitive auction. We have found over years of research that an auction is by far the most efficient way to price search advertising and have no intention of changing that.

In essence, Yahoo is saying that this deal means:

• That Yahoo! Publishers Network (YPN) is inferior compared to Google AdSense. We all know that already. Question is — why are they giving up this early?
• Better ads, better revenue for YPN Publishers which is good but what about Publishers who are banned from AdSense and went to YPN?
• Yahoo! announced a minimum bid of $0.01 per click on their Search and Content network. Google has a $0.05 minimum bid on AdWords. Say goodbye to the $0.01 for the advertisers?

The agreement only puts the partnership in the United States and Canada but might expand globally later on. Would be interesting how Microsfot would react to this. *heh*

As expected, the market didn’t like the idea of Yahoo going into a suicidal plunge. Shares dropped from $26 to $23 (-10%). Google did a little better with one and a half percentage point increase.