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April 17, 2008

Yahoo’s Google ad trial a success?

Posted by David Hunter at 10:25 AM ET.

Matthew Karnitschnig and Kevin Delaney are reporting at the Wall Street Journal that “people familiar with the matter” say that Yahoo’s trial of running Google ads alongside Yahoo Search results was a success and that the Yahoo-Google Deal Advances. Since Yahoo announced the trial on April 9 and it was supposed to last two weeks, it seems a trifle premature to be declaring it a success. However, the general expectation has always been that running Google ads wiould pay better than Yahoo’s inhouse sales, so a positive result would be no real surprise.

The real question is what can Yahoo make of this in fending off Microsoft’s acquisition attempt since potential Google antitrust concerns cloud the picture. Because the relevant consideration with shareholders is how much they get up front and a Google deal has only an indirect effect on that, any such deal or deal rumor seems merely to be a bargaining chip that is hopefully worth a higher Microsoft offer.

Still, it has to rankle that Yahoo is effectively telling the world that if they could only get their act together, they could actually make significantly more money from Yahoo Search ad sales. It also raises uncomfortable doubts about how much Microsoft could make on the same search ads.

Filed under Acquisitions, Coopetition, General Business, Google, Governmental Relations, Microsoft, Yahoo

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