Yahoo said Thursday that under the new Google pact, it will display some ads sold by its rival in a deal Yahoo estimated would generate $800 million in annual revenue.
A Google co-founder, Sergey Brin, said in an interview that the company was happy to have Yahoo as an advertising partner but refused to discuss Google’s expected financial gain from the deal.
Yahoo will control how Google’s ads are displayed alongside its own advertising. The pact is sure to face regulatory scrutiny. The companies agreed to delay its implementation for up to three-and-a-half months to allow a Justice Department review.
“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,” said Omid Kordestani, Google’s SVP of Global Sales and Business Development in a blog post.
Under the agreement, Yahoo can run ads supplied by Google alongside its own search results and on some of its websites in the United States and Canada. Each placement will be a mini-auction run by Yahoo in which Yahoo and Google bid to sell the ad.
Sanford C. Bernstein analyst Jeffrey Lindsay said that could add as much as $5 per share to Yahoo’s value, which he currently pegs at $25 per share.
Source: The Wall Street Journal
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