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Yahoo makes the case for Google search ads

Amid antitrust scrutiny and some advertiser resistance, Yahoo is making the case for its controversial search-ad partnership with Google.

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Stephen Shankland

SUNNYVALE, Calif--Yahoo is on a campaign trail of its own, taking an opportunity Thursday to plug a search-ad partnership with rival Google that could bring new profits to the company but that also faces possible antitrust hurdles.

Hilary Schneider, executive vice president of Yahoo U.S.
Hilary Schneider, executive vice president of Yahoo U.S. Stephen Shankland/CNET News

The partnership, which is expected to go into effect in early October, is "good news for consumers and for advertisers," said Hilary Schneider, executive vice president of Yahoo U.S., speaking here to reporters at an event to discuss Yahoo's strategy to open its technology foundation.

She showed a specific example to bolster her case. A search for "red roses in Birmingham Alabama" yields no advertisements on Yahoo's search engine and 11 on Google's. Under the deal, Yahoo can show Google's ads when is chooses, sharing the resulting revenue.

"We didn't have depth of coverage in that search query in that marketplace," Schneider said. "By enabling Google to have access to that query term, we are able to create more access, better return on investment for the advertiser, and the ability, we think, to satisfy the user by giving them the most complete set of results against that query term."

Yahoo expects $800 million in revenue and $250 million to $450 million in incremental cash flow from the first year of the deal.

The company is clearly convinced of the deal's merits. Now Yahoo must convince antitrust authorities and try to reverse Association of National Advertisers' opposition to the Yahoo-Google ad deal.