A new amendment to the agreement that Microsoft and Yahoo enjoy should improve the partnership, boost innovation, and help both companies deal with search issues.
“Microsoft and Yahoo announced that the companies amended their search partnership to improve the search experience, create value for advertisers, and establish ongoing stability for partners,” according to Yahoo in a recent announcement. “The update reaffirms commitments made by both companies in the original 2009 agreement, while implementing changes to keep the partnership strong and productive, with both companies committed to maximizing the alliance.”
What’s it all about? Two things, basically.
For starters, Yahoo will now have better flexibility to “enhance the search experience on any platform.” That’s due to the fact that the partnership is non-exclusive for both desktop and mobile. As a result, Yahoo will continue to serve Bing ads as well as search results for a majority of its desktop search traffic.
Then there’s the sales aspect.
“Microsoft will become the exclusive salesforce for ads delivered by Microsoft’s Bing Ads platform, while Yahoo will continue to be the exclusive salesforce for Yahoo’s Gemini ads platform,” Yahoo noted. “Integrating the sales teams with those responsible for engineering will allow both companies to service advertisers more effectively. Microsoft and Yahoo plan to begin to transition managed advertiser sales responsibilities this summer.”
Both Microsoft and Yahoo seem pleased with the revamp.
“Our global partnership with Yahoo has benefited our shared customers over the past five years and I look forward to building on what we’ve already accomplished together,” said Microsoft CEO Satya Nadella. “Our partnership with Yahoo is one example of the diverse partnerships we’ll continue to cultivate in order to have the greatest impact for our customers.”
Yahoo needs the search business — it currently accounts for 35 percent of the company’s revenue (or about $1.8 billion). The terms of the original agreement dictate that Microsoft gives Yahoo about 90 percent of the revenue from ads it shows on Yahoo. The companies said that under the revised deal, “this existing underlying economic structure remains unchanged.”
“Over the past few months, Satya and I have worked closely together to establish a revised search agreement that allows us to enhance our user experience and innovate more in our search business,” said Yahoo CEO Marissa Mayer. “This renewed agreement opens up significant opportunities in our partnership that I’m very excited to explore.”