Microsoft & Yahoo! Search Marketing Agreement

The agreement between the two companies is a 10 year agreement in which Microsoft’s “Bing” will power Yahoo! search results and Yahoo! will sell the search advertising for the newly combined entities.

The search advertising platform of choice is Microsoft’s AdCenter which provides easier navigation and overall usability.

 Microsoft & Yahoo! last month reached a combined 28.4% search market share according to comScore which creates a Google competitor.  Under the deal Microsoft will pay Yahoo! 88% of search advertising revenues generated by Yahoo! sites who are expecting to see a $275 million operating cash flow as a result of this deal.

"This agreement comes with boatloads of value for Yahoo!, our users, and the industry, and I believe it establishes the foundation for a new era of Internet innovation and development," said Yahoo! Chief Executive Officer Carol Bartz.

"Users will continue to experience search as a vital part of their Yahoo! experiences and will enjoy increased innovation thanks to the scale and resources this deal provides," continued Bartz. "Advertisers will also benefit from scale and enjoy greater ease of use and efficiencies working with a single platform and sales team for premium advertisers. Finally, this deal will help us increase our investments in priority areas in winning audience properties, display advertising capabilities and mobile experiences."

Microsoft who attempted to buy out Yahoo in 2007 have finally struck the deal they wanted, with an ambition to take on rival Google, Microsoft’s CEO Steve Ballmer hopes combining both the number 2 & number 3 search engines will help innovation, which he states is needed to take share from Google.

Microsoft and Yahoo! will combine their complementary strengths and search platforms allowing users to find what they are looking for faster and with more personal relevance.

"With our new Bing search platform, we've created breakthrough innovation and features," said Ballmer. This agreement with Yahoo! will provide the scale we need to deliver even more rapid advances in relevancy and usefulness. Microsoft and Yahoo! know there's so much more that search could be. This agreement gives us the scale and resources to create the future of search."

From an agency perspective combining both Yahoo!’s traffic with Microsoft products (AdCenter & Bing) will give Microsoft the boost they have needed to show the full potential of their products.

For self-serving advertisers, one benefit from this agreement is that they will transition to Microsoft’s AdCenter platform, which provides unique tools such as in-depth campaign analysis and intelligent research and targeting.

This agreement is exactly what Bing needs to keep the momentum going, however only time will tell how much this will truly change the world of search.