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Yahoo extends Microsoft ad deal to mid-2006

Yahoo Inc. has agreed to extend its deal to place advertisements on Microsoft Corp.'s MSN sites in the United States and overseas by one year through June 2006, Yahoo said Thursday.
/ Source: Reuters

Yahoo Inc. has agreed to extend its deal to place advertisements on Microsoft Corp.'s MSN sites in the United States and overseas by one year through June 2006, Yahoo said Thursday.

Yahoo and Google Inc. have been locked in a battle for customers on both sides of the Atlantic in the lucrative business of selling ad-sponsored search engine listings.

Microsoft is now joining the battle, building its own ad-placement technology even as it struck the deal with Yahoo, the Wall Street Journal reported Thursday.

The previous agreement between Sunnyvale, California-based Yahoo's Overture Services Inc. and Microsoft ran through June 2005, according to a statement.

Under the terms of the deal, Overture will continue to provide its service to MSN sites in the United States, Canada, Europe and Asia.

An Overture spokeswoman declined to comment on the value of the deal, though the Journal said some analysts believe it could generate about $200 million in revenue a year for Overture.

The newspaper said it was uncertain when Microsoft would replace Yahoo's service, though the extension of the contract would imply that any service from Microsoft would not be ready by June 2006.

(MSNBC content is distributed by MSN. MSNBC itself is a Microsoft - NBC joint venture.)

Microsoft did not comment on whether it was working on its own ad-placement technology, but Adam Sohn, Director of MSN, said in a statement that "we are pleased to continue this mutually beneficial relationship."

Time Warner's AOL Europe last month replaced Yahoo's Overture with Google to provide advertiser-sponsored search results for its Internet service.

Under the business model, advertisers bid for the top positioning for popular search terms such as "travel" or "digital camera." The corporate-sponsored search results appear alongside the results, ranked in terms of the highest bid.

Selling ads in this way has helped drive the recovery of online advertising in both the United States and Europe.