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Yahoo May Outsource Pay-Per-Click to Google

If expanded, deal would hurt domainers.

Yahoo (NASDAQ: YHOO) has started a test with Google (NASDAQ: GOOG) to determine if it can make more money using Google’s ad feed than its own, reports Wall Street Journal.

The deal involves 3% of search queries on Yahoo’s site, which will show Google Adsense for Search ads instead of Yahoo’s own search ads. Yahoo is trying to show that it has greater revenue potential that Microsoft (NASDAQ: MSFT) gives it. Essentially, Yahoo is saying that Google ads deliver more revenue per click than its own:

Analysts have predicted outsourcing its search ads to Google would boost Yahoo’s cash flow, since Google’s system generates significantly more revenue for each search query than Yahoo does.

This is ironic given that Yahoo’s search platform it based on the pioneer of pay-per-click search, GoTo.

If Yahoo were to expand this and completely outsource ad serving to Google it would cripple the domain industry. Already, the industry only has two major companies to work with for domain parking. Many major parking companies including Parked.com, Skenzo, and Name Media’s parking platforms use a Yahoo advertising feed.

This could merely be a simple test for Yahoo to show its earnings potential and irk Microsoft. Let’s hope so.

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  1. Richard Ball says

    FYI, at least for this initial test, it’s not an issue for domainers. From the Yahoo press release:

    “The test will apply only to traffic from yahoo.com in the U.S. and will not include Yahoo!’s extended network of affiliate or premium publisher partners.”

    I can’t believe they’d scrap Overture/YSM. Wow.

  2. Ron Sheridan says

    re: “This is ironic given that Yahoo’s search platform it based on the pioneer of pay-per-click search, GoTo.”


    How about evolutionary. GoTo/Overture/Yahoo = the old way laiden with overhead and human editing.

    Google = the new way with no human editing, let the advertisers write the ads, then let the technology do the heavy lifting and weed out the inefficiencies, and weak ads/advertisers.

  3. Rob Sequin says

    Good news for evolanding and domainembarking and the likes.

    Parking is drying up would be my guess. Google and Yahoo pay pennies on the dollar to what they take in.

    If they need a better quarter, guess what, they dial back the payouts to adsense and YPN. No great mystery there.

    Kontera and chitika and commission junction are the way of the future I would think. Sorry parking companies. Time to innovate or die.

  4. damir says


    Domain name owners should get together and start an International marketing company.

    Why get paid peanuts when the domain name owner can own the GOLD

  5. Rob Sequin says

    Tell Frank Shilling. He’s got some pull.

    Anyway, I forgot to say that if Yahoo thinks that it can make more money by showing Adsense than it’s own ads, WOW, Yahoo must really be sucking wind.

    To me, Yahoo just fell off the cliff whether MS buys them or not, you can throw Yahoo on the Netscape, geocities, webvan, excite shit pile.

  6. Andrew says

    @ Ron – I think Google does more human editing than they let on. And it takes them over a week to approve ads that falsely trigger alarms.

    Yahoo now auto-approves most ads. But you’re right, it took them too long to get to that point. Yahoo’s legacy infrastructure has also hampered its efforts.

    Google did end up paying a hefty licensing fee to Yahoo, but not enough.

  7. Bryan says

    MSFT wont like that: too much dependance on goog. no company will like that and it will cheapen the yhoo brand. bad call: shows desperation by yhoo.

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