The news is finally out. Yahoo has signed a contextual advertising deal with search engine giant Google. Yahoo declared that it will allow Google to display its AdSense and AdMob ads on Yahoo and its affiliated websites. As soon the news struck the floor, Yahoo's share inflated over 1.5% in after-hours trading.
Before going in the detail, let me recall a brief definition of contextual advertising
“Contextual Advertising is a kind of targeted advertising where an advertiser displays an ad on a web page in co-relation with the content published on the page.”
What This Deal Is All About:
This milestone partnership is all set to write a new business association between two biggies Yahoo and Google. Although, neither of two has disclosed their revenue ratio for the ad agreement, experts believe that a whopping 68% of total revenue will come from the owners who display the ads. Let me point out the salient features of this tie-up :
- The partnership will be designed around the sharing of resulting ad revenue.
- This $800 million deal for Yahoo has been consented for 4 years.
- The deal is non-exclusive in nature that means Yahoo will continue displaying ads of Bing and other providers.
- The deal will serve ads that are relevant and related to the content on a particular site.
- It will serve Google's ad programs for both computers and mobile devices.
- These ads will include Finance, Sports and News sites of the Yahoo.
A Win-Win Situation For Google and Yahoo:
The alliance will be a turning point for both the players in the market. Experts however believe that Yahoo can yield more fruits than Google as Yahoo's deal with Microsoft's Bing didn't turn up well as expected. Pointed below are the business advantages that Google and Yahoo expects to clinch out of the deal.
What Yahoo Gets:
- An access to Google’s Adsense to advertise on search and content sites
- Revenue between $250 – $400 million in cash flow
- Better prices for its ads to capture the market cap
- A considerable expansion in its reach
- An opportunity to offload unsold inventory
What Google Gets:
- Google ads will now appear on various Yahoo properties
- Additional space to display its ads and increase its advertising revenues
- Increased exposure for its ads
- Google's average price for search ads will be escalated
Although and as expected, this news has opened the can of speculations, experts believe that it will take two to three months to clear the real picture.