Suddenly Google Is Going To Sell Ads On Yahoo

Yahoo just announced that Google will start selling some ads on Yahoo's websites and mobile services.

Specifically, it's going to sell contextual ads—ads keyed to words that appear on pages.

On the one hand, this is not surprising, since Yahoo CEO Marissa Mayer ran search at Google for years, and has widely been expected to do some kind of deal with her former employer to boost Yahoo's revenues.

On the other hand, it is surprising that the announcement makes no mention of Yahoo's big, multiyear agreement with Microsoft for search advertising.

It's not clear if Mayer renegotiated Yahoo's agreement with Microsoft.

Or maybe she 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.

Before Mayer was hired, Google and Yahoo were in talks to do some kind of deal to have Google place ads in "remnant"—left-over—ad inventory that Yahoo could not sell. Contextual ads are one way, though not the only way, to fill that remnant inventory.

At the time, the assumption was that Yahoo was going to sell of its ad-technology business, which is key to brokering and placing ads. The fact that Mayer decided to keep ad tech in-house may have allowed it to do a technically complex deal to keep selling its own ads but back-fill with Google's ads—versus, say, ust outsourcing the whole business to Google.

Frank Shaw, Microsoft's top spokesperson, confirmed to Business Insider in a statement that the deal with Google is allowed under the Yahoo-Microsoft agreement:

The strategic alliance we entered with Yahoo allows them to enter into agreements with other providers in the contextual advertising space. Bing Ads contextual offering is one of those providers. We continue to work closely with Yahoo on making our Search Alliance successful for both companies and our customers.