Yahoo and Google Search Ad Deal – 2015

As part of Yahoo’s quarterly-earning results it was recently announced that an October 1, 2015 deal was signed with Google. As outlined later in this post, Yahoo recently signed a non-exclusive deal with Google. The deal accounts for Google’s ability to provide search ads within Yahoo’s search results.

Understanding the Nuances Of Yahoo’s Deal With Google

As part of the deal, Google has agreed to provide search ads. The search engine giant will then pay Yahoo an undisclosed percentage of the revenue that is earned from the aforementioned search ads. It is important to note that this is a milestone for both Yahoo and Google. Previously, Yahoo had an agreement with Microsoft Bing; however, that deal was renegotiated in March, which provided Yahoo with the opportunity needed to explore other search ad providers. On October 1, 2015, Yahoo did just that and signed a three-year deal with Google.

Yahoo and Google also revealed that their deal is subject to certain provisions with the US Department of Justice; however, the two companies have remained “tight-lipped” about the exact details. Since the deal is non-exclusive, Yahoo is able to provide its own search ads, as well as those offered by Microsoft’s Bing.

To further understand the nuances of the deal, Yahoo has provided excerpts below:

On October 19, 2015, Yahoo! Inc., a Delaware corporation (“Yahoo”), and Google Inc., a Delaware corporation (“Google”), entered into a Google Services Agreement (the “Services Agreement”). The Services Agreement is effective as of October 1, 2015 and expires on December 31, 2018. Pursuant to the Services Agreement, Google will provide Yahoo with search advertisements through Google’s AdSense for Search service (“AFS”), web algorithmic search services through Google’s Web search Service, and image search services. The results provided by Google for these services will be available to Yahoo for display on both desktop and mobile platforms. Yahoo may use Google’s services on Yahoo’s owned and operated properties (“Yahoo Properties”) and on certain syndication partner properties (“Affiliate Sites”) in the United States (U.S.), Canada, Hong Kong, Taiwan, Singapore, Thailand, Vietnam, Philippines, Indonesia, Malaysia, India, Middle East, Africa, Mexico, Argentina, Brazil, Colombia, Chile, Venezuela, Peru, Australia and New Zealand.

Under the Services Agreement, Yahoo has discretion to select which search queries to send to Google and is not obligated to send any minimum number of search queries. The Services Agreement is non-exclusive and expressly permits Yahoo to use any other search advertising services, including its own service, the services of Microsoft Corporation or other third parties.

Google will pay Yahoo a percentage of the gross revenues from AFS ads displayed on Yahoo Properties or Affiliate Sites. The percentage will vary depending on whether the ads are displayed on U.S. desktop sites, non-U.S. desktop sites or on the tablet or mobile phone versions of the Yahoo Properties or its Affiliate Sites.

Yahoo will pay Google fees for requests for image search results or web algorithmic search results.

Either party may terminate the Services Agreement (1) upon a material breach subject to certain limitations; (2) in the event of a change in control (as defined in the Services Agreement); (3) after first discussing with the other party in good faith its concerns and potential alternatives to termination (a) in its entirety or in the U.S. only, if it reasonably anticipates litigation or a regulatory proceeding brought by any U.S. federal or state agency to enjoin the parties from consummating, implementing or otherwise performing the Services Agreement, (b) in part, in a country other than the U.S., if either party reasonably anticipates litigation or a regulatory proceeding or reasonably anticipates that the continued performance under the Services Agreement in such country would have a material adverse impact on any ongoing antitrust proceeding in such country, (c) in its entirety if either party reasonably anticipates a filing by the European Commission to enjoin it from performing the Services Agreement or that continued performance of the Services Agreement would have a material adverse impact on any ongoing antitrust proceeding involving either party in Europe or India, or (d) in its entirety, on 60 days notice if the other party’s exercise of these termination rights in this clause (3) has collectively and materially diminished the economic value of the Services Agreement. Each party agrees to defend or settle any lawsuits or similar actions related to the Services Agreement unless doing so is not commercially reasonable (taking all factors into account, including without limitation effects on a party’s brand or business outside of the scope of the Services Agreement).

Time will tell just how lucrative this deal is for Yahoo and Google.

How Does This Deal Affect You and Small Business Advertisers?

Well if you are advertising on the Google Adwords platform, then your ads may soon be displayed within Yahoo’s search results. This also means greater exposure for your ad throughout the world.