In an announcement made just moments ago, Yahoo has formally decided to try a limited test of Google’s AdSense for Search program in their search results. From the release:
The test will apply only to traffic from yahoo.com in the U.S. and will not include Yahoo!’s extended network of affiliate or premium publisher partners. The test is expected to last up to two weeks and will be limited to no more than 3% of Yahoo! search queries.
In response to speculation earlier today, Business Week’s TechBeat pointed out that “Analysts have long pointed out that Yahoo could jack up its profits overnight by outsourcing its search advertising to Google, which generates much more revenue per search than Yahoo. Indeed, such a deal has been rumored for at least the past year.”
Granted, this could potentially increase Yahoo’s search profits—but honestly, are they going to be the only ones? Google’s gotten big press for allegedly faltering growth in AdSense clicks. Increasing their ad real estate might be one way to help increase their stalled click growth, not to mention their income.
[I]t can’t legitimately be called an alternative route for Yahoo, given that it doesn’t do what Microsoft’s offer does—namely pay Yahoo shareholders somewhere around $31 per share. The [original Wall Street Journal] article notes that this alone wouldn’t necessarily torpedo a deal. But if Yahoo can come in with a strong Q1 and show convincengly [sic] that pulling this lever would lead to a positive revenue impact, then it could at least bring shareholders around to the idea that an independent Yahoo is the way to go.
In its announcement, Yahoo seems to confirm this, stating that “Yahoo!’s board of directors is exploring strategic alternatives to maximize stockholder value, including exploration of potential commercial business arrangements.”
This isn’t the first time that a potential deal has been rumored—last month we speculated that if Yahoo bought AOL, they might both end up using Google for search. But this time, with the deal already confirmed by Yahoo, it appears a bit more serious. What might this mean for the future of Yahoo’s paid search program—and their fortunes for search in general?