Yahoo! to display Google ads in their search results

Yahoo! has just signed a non-exclusive pact with Google, which will enable them to run Google text-based ads alongside search results on some of Yahoo's Web properties in the North America region.

This strategy is similar to that of IAC/InterActiveCorp's (IACI) Ask.com search site, which sells its own ads and displays ads from Google. It was said that the two companies has in fact run a limited test in April, in which Google placed ads alongside to about 3% of Yahoo! search result pages in the US region.

This deal is expected to boost their revenue by as much as $800 million a year and generates an estimated $250-450 million in incremental operating cash flow for them.

Google is seen to get the dual benefit of gaining a major publisher in Yahoo! and keeping them out of the hands of Microsoft, which previously offered to acquire Yahoo! for some $44.6 billion. Microsoft CEO Steve Ballmer has previously stated that they would not be interested in pursuing Yahoo! if Yahoo! decided to partner with Google.