Yahoo to Test Google Ads

This article talks about Yahoo’s plans to outsource its Web-search advertising to Google and assessing this strategy’s potential for revenue.

As reported by the Wall Street Journal (WSJ), Yahoo said that it has plans involving carrying search advertising from Google as part of a test that can result in a stronger and extensive partnership. The trial lasting for 2 weeks will be confined to United States traffic and no greater than 3 percent of the Web Search Queries of Yahoo. It is particularly designed for both of the sides to assess the potential for revenue of a broader search advertisement outsourcing arrangement. Individuals acquainted with the matter said that Yahoo had already been in talks since last year to outsource its Web-search advertising in the European continent to Google.

According to the estimation of Mark Mahaney, Citigroup Global Markets’ analyst, by outsourcing all its search advertising to Google, Yahoo can increase its cash flow by more than 25 percent every year. A few of the investors want Yahoo to discard its own search advertising system for increasing its revenue quickly. Analysts anticipate that Yahoo’s cash flow would increase by outsourcing its search advertisements to Google. This is because compared to Yahoo, Google’s system produces considerably greater revenue for every search query. Yahoo would probably collect most of revenue and Google can pocket the remainder as a commission under an arrangement of such a kind.

Yahoo spoke in a press release “the testing does not necessarily mean that Yahoo will join the AdSense for Search program or that any further commercial relationship with Google will result”. Jerry Yang, Yahoo’s Chief Executive Officer has previously said “We believe having a principal position in both search and display advertising is critical to creating…long-term shareholder value”.

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