Yahoo Announces Non-Exclusive Search Agreement With Google

Well, it was a little later than we expected, but Yahoo has announced a non-exclusive deal with Google around search and search advertising. Yahoo's press release is below and their blog post is here.

Additionally, Google's press release on the announcement can be found here and their blog post here.

Yahoo! to Strengthen Competitive Position in Online Advertising Through Non-Exclusive Agreement With Google

Agreement Advances Yahoo!?s Open Strategy; Enhances Ability to Compete in Converging Search and Display Marketplace

SUNNYVALE, Calif.¿(BUSINESS WIRE)¿Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, announced today that it has reached an agreement with Google Inc. that will enhance its ability to compete in the converging search and display marketplace, advancing the company?s open strategy. The agreement enables Yahoo! to run ads supplied by Google alongside Yahoo!?s search results and on some of its web properties in the United States and Canada. The agreement is non-exclusive, giving Yahoo! the ability to display paid search results from Google, other third parties, and Yahoo!?s own Panama marketplace.

Under the terms of the agreement, Yahoo! will select the search term queries for which ? and the pages on which ? Yahoo! may offer Google paid search results. Yahoo! will define its users? experience and will determine the number and placement of the results provided by Google and the mix of paid results provided by Panama, Google or other providers. The agreement applies to paid search and content match and does not apply to algorithmic search. The agreement also applies to current partners in Yahoo?s publisher network.

Yahoo! CEO and co-founder 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.?

?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.?

Agreement Provides Attractive Economics and Enhances Search Monetization

Yahoo! believes that this agreement will enable the Company to better monetize Yahoo!?s search inventory in the United States and Canada. At current monetization rates, this is an approximately $800 million annual revenue opportunity. In the first 12 months following implementation, Yahoo! expects the agreement to generate an estimated $250 million to $450 million in incremental operating cash flow.

The agreement will enhance Yahoo!?s ability to achieve its goal to grow operating cash flow significantly, while at the same time providing flexibility to continue to invest in ongoing initiatives such as algorithmic search innovation and search and display advertising platforms. It gives Yahoo! complete flexibility to continue to use its Panama paid search results.