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Yahoo Revives Ad Partnership With Google

Five years after a failed attempt, Yahoo and Google try once more to set up an ad partnership.

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Google and Yahoo have reached an agreement to show Google ads on Yahoo Web pages and co-branded websites, a partnership that the two companies tried five years ago, only to be driven apart by fear of antitrust action.

The deal will let Google serve contextual ads from its AdSense advertising partners on Yahoo's unsold inventory of content. What's different this time is mobile, specifically the inclusion of Google's AdMob service. In 2008, mobile advertising was in its infancy. In 2013, mobile advertising is a top priority for online marketing and technology companies.

"Today, we're excited to announce that we recently 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," Yahoo said in a statement.

[ Google is trying to beef up its ad machine. Read Google Updates AdWords For Mobile Era. ]

Google issued a similar statement in June 2008, but by November of that year, the deal was off. The company's chief legal officer, David Drummond, said in a blog post at the time that after four months of regulatory scrutiny, government regulators and some advertisers still had concerns about the deal and that the two companies cancelled the agreement to avoid a long legal battle and damaging relationships with other partners.

Two years later, Microsoft entered into a search advertising partnership with Yahoo, something of a consolation prize since Microsoft had tried unsuccessfully to buy Yahoo in early 2008.

But Yahoo hasn't prospered with Microsoft running its search ad business. Last July, during Yahoo's Q2 2012 earnings call -- Marissa Mayer's first day as CEO after leaving Google -- Yahoo CFO Tim Morse acknowledged that "we're unable to report progress by Microsoft on closing the gap in marketplace [revenue per search]." In other words, Yahoo wasn't earning as much revenue per search with Microsoft as it could in theory have earned with Google.

Since then, Yahoo's stock has risen, a sign Mayer's stewardship of the company is having a positive effect. Her renewal of ties with Google should help Yahoo further, and this time government regulators are unlikely to intervene, given that Google has just settled with the Federal Trade Commission to end the agency's antitrust investigation.

Asked whether reaching a deal with Yahoo was easier with Mayer, a former Google executive, at the negotiating table, a Google spokeswoman said only, "We work with a number of top publishers to help them monetize their content through AdSense for Content and AdMob. We're thrilled to now include Yahoo."

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