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Google Inc (GOOG) Signs Global Advertising Deal with Yahoo! Inc. (YHOO)

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Yahoo! Inc. (NASDAQ:YHOO) and Google Inc (NASDAQ:GOOG) have hooked up in a global deal that results in Google ads appearing on some of Yahoo!’s websites. The global, non-exclusive agreement will put Google Inc (NASDAQ:GOOG)s Adsense ads on Yahoo!’s network with the ultimate purpose of showing better targeted and relevant ads for the Yahoo! visitors. In exchange, Google acquires extra visibility with this new deal.

On the corporate blog of Yahoo!, they don’t disclose much information about their deal with Google:

At Yahoo!, we’re focused on doing everything we can to make the user experience inspiring and engaging. One way we do that is by providing relevant and well-targeted content — whether that be editorial or advertising content.

Yahoo! users won’t note anything different in how and where the ads appear. It’s really a back-end deal that works on getting the right ad to the right user at the right time. This relevant and holistic experience of editorial content and advertorial content is what Google Inc (NASDAQ:GOOG)’s contextual advertising is great at, or at least better than others.

Yahoo! Inc. (NASDAQ:YHOO)

Google’s contextual advertising

I had the opportunity to do a massive amount of Google Inc (NASDAQ:GOOG)’s contextual ad buying for an ex client of mine five years in a row. This gave me a pretty good view of the developments in Google’s contextual advertising business.

It’s really an interesting sub-segment of paid advertising. Search advertising is true pull marketing, showing ads that only appear when a user is looking for something on that specific subject. Contextual advertising, on the other hand, is push marketing in an integrated way. When someone is reading about a city where he or she might potentially go on vacation, contextual ads will appear that focus on that specific city. That way, the web property is creating a holistic experience, benefiting from Google Inc (NASDAQ:GOOG)’s advertisers and network, which basically means a plug-and-play system for the web property.

Contextual advertising results vary more, because the intention is not known from the user.  Is the user simply searching for information, or does he want to book a vacation? This is where the complexity kicks in and where Google is great at providing good results to advertisers and web property owners.

In those five years the enhancements and relevancy of Google’s contextual advertising has increased a lot, but it’s still a challenging business. It’s all about natural language, behavior, intention and so on, so it requires continuous tweaking in “understanding” content on webpages and intention of users.

What does this mean for the Bing Yahoo! deal

Microsoft Corporation (NASDAQ:MSFT)‘s Bing has an exclusive deal with Yahoo! to serve their ads on Yahoo! search queries, a deal that is running until 2019.

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