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Yahoo will use Google contextual ads

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From the why-weren't-they-doing-this-all-along department:

Marissa Mayer found a loophole: While Yahoo and Microsoft's 2009 search deal has multiple exclusivity requirements, those specifically do not cover contextual advertising. 

The difference is serving up ads based on someone search for, say, "electric SUV"—search advertising—and displaying ads on a page featuring a review of a new electric sports-utility vehicle—contextual advertising.

Yahoo's news and entertainment sites, like Yahoo Finance, Yahoo Sports, and OMG, are particularly well-suited for contextual advertising.

Ads keyed to words on pages make a lot of sense for Yahoo content.

So why have they never done this before?

I'm now convinced that Marissa Mayer was the right choice for Yahoo.

All she has to do is keep Yahoo properties like Finance, Sports, and OMG as they are today.

Yahoo can keep the Microsoft display ad and Microsoft search deals in place.

Yahoo can add Google contextual ads, Facebook social ads, and Yahoo's own mobile ads (and/or do something with Twitter on the mobile ad side).

Yahoo will be like the Switzerland of The Web. Plays nicely with everyone!

In working with all of them, Yahoo will become much more profitable.

Marissa is a great person for making Yahoo a huge player on the Internet that plays nicely with Google, Facebook, AND Twitter, because she has close professional relationships with people on the executive teams in each of those companies. Since Yahoo's relationship with Microsoft is already in place, all the better.

Add in strategic alliances with Amazon, Apple, and eBay, and Yahoo pretty much becomes the hub for the whole Internet. Brilliant!

More from BusinessInsider on the Google-Yahoo surprise deal:

A couple weeks ago, Marissa Mayer surprised a lot of people in the industry when the company she runs now, Yahoo, announced plans to outsource some of its ad sales to the company that made her famous and she quit in July, Google.

In a note on its corporate blog, Yahoo said it had signed "a global, non-exclusive agreement with Google to display ads on various Yahoo! properties and certain co-branded sites using Google’s AdSense for Content and Google’s AdMob services."


That deal has been in the works forever. [Former interim CEO] Ross [Levinsohn] and [former Yahoo corporate development executive Jim] Heckman were pushing for that big time.

The deal addresses two key issues:

Bid density. The hope is that this deal creates a really stable price floor raising rates across the board. Because [Yahoo's display advertising exchange, Right Media] has been under-invested in on many levels, the amount of demand is significantly less than the amount of supply, so economical principals dictate that as such, prices will fall. This deal may impact pricing and yield management that impacts all campaigns all the way through the sales org by creating a new equilibrium point.

If you look at Yahoos financials, their display ad business which is the main one they control (not search) is continuing to decline. Sales leadership is weak and good sales execs continue to leave. This deal signals the fact that they do NOT have a good handle on how to run their own business.

Make no mistake, it's a bandaid. It doesn't address their fundamental issues it just masks the symptoms for awhile.

I think it's a great move, and buys them some time to roll out more things. Well done.

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