Last week, Yahoo! announced it had signed a non-exclusive global agreement with Google to serve contextual ads on Yahoo properties and some co-branded websites. Last time the Silicon Valley giants attempted a strategic partnership, the deal was struck down by antitrust regulators at the U.S. Department of Justice. So, what is different this time?
The answer lies with the mastermind behind the negotiation: Yahoo’s CEO, and ex-Google executive, Marissa Mayer.
This deal is a sign that Mayer’s leadership is starting to have positive outcomes. Rather than contributing to the long-standing rivalry between the two companies she has chosen to build bridges. Her experience and knowledge of Google were key t negotiating this partnership, and will most likely serve as solid foundation for Yahoo to have the success that was not possible back in 2008 when it first attempted a search advertising partnership with Google.
Fast forward to 2013 and Yahoo and Google are tying up on display, as opposed to search. What does this mean for both companies? What does it mean for display advertising?
Needless to say, the deal benefits both corporations. Yahoo, a company that recently reported a 10% year-on-year decline in display ad revenue, will finally see its ad sales prosper. This should result in the type of organic revenue growth that Mayer promised when she first took office – something that wasn’t possible through the company’s previous display ad deal with Microsoft.
Yahoo’s user experience will also improve. Having access to Google’s AdSense will allow the company to present more significant and relevant display ads to users. For Google, this of course means more revenue and an even greater presence on the Web. Most important, though, the deal offers the promise of a closer and more lucrative relationship with Yahoo and its Web properties, which register approximately 700 million unique visitors each month.
This alliance also has implications for brands with display advertising campaigns. On the one hand, Google’s AdSense service is the leading provider of contextual ads – those display ads that relate directly to the text featured on a site. On the other hand, most of Yahoo’s websites (such as Mail, Sports, News, Finance, etc.) have a highly loyal user base that trusts and relates to each property’s content. These two aspects combined provide more opportunities for success to media planners and buyers.
Through Google’s extensive ad network we will now be able to reach the consumers that turn to Yahoo, the largest Web portal in the United States, for their daily Internet habits. At the end of the day, serving users the right ad at the right time is what we do, and any tools that increase reach will always be welcome.
What impact do you think Yahoo’s new display ad partnership with Google will have on online marketing?