Google is breaking up their advertising marriage in a sign Yahoo! sees as Google’s not wanting to fight Department of Justice and their decision to block their agreement. It looks like their June – November marriage has come to a halt.

In a letter to Yahoo! advertisers, Hilary Schneider, Executive VP, spoke of their disappointment in Google’s decision to leave their agreement but I’m sure with the hit Google took this year in the stock market the last thing they want to get into is a lengthy court battle that would cost millions of dollars to defend.

This leaves a lot more questions on the table concerning Yahoo!’s  future. Clearly Jerry Yang has been having a bad year and people are calling for his dismissal  so it will be interesting to see where this will end up.

In the meantime we’ll keep plugging away while Microsoft, who are probably sharpening their fangs, wait in the wings

Dear Advertiser,

We wanted to reach out to you directly regarding Google’s decision, announced earlier today, to terminate the advertising services agreement that the companies announced in June. Yahoo! continues to believe in the benefits of the agreement, and is disappointed that Google has elected to withdraw from the agreement rather than defend it in court. Google notified Yahoo! of its refusal to move forward with implementation of the agreement following indication from the Department of Justice that it would seek to block it, despite Yahoo!’s proposed revisions to address the DOJ’s and advertisers’ concerns.
While disappointed by this turn of events, we are writing to you to reaffirm our commitment to working together to drive your advertising results, and to provide the continued leadership you expect. The fact is that this deal was incremental to Yahoo!’s product roadmap and does not change Yahoo!’s commitment to innovation and growth in search.

As you know, Yahoo! has long focused on how to improve the user, advertiser and publisher experience. We will continue to enable you to easily connect with the consumers you most want to reach, by creating a more open, efficient and effective marketplace for advertisers and publishers. We also plan to continue to provide the cutting-edge advances in products, platforms and services that the industry needs and expects, by leading the way in helping advertisers navigate the converging contextual and search ad markets. Finally, we remain committed to innovation in anticipating the needs of Yahoo!’s audiences–one of the largest and most engaged populations of consumers on the web–by creating the unique context that delivers results for brand advertisers online.

In short, even in the absence of a commercial agreement with Google, we intend to become an ever-stronger player in online advertising. Our certainty on this front comes from the progress we continue to make in many areas, not the least of which are the significant innovations we’re making in search. We continually optimize our algorithmic and sponsored search. In fact, in 2008 alone, we have developed and launched hundreds of improvements to our search engine, including index expansions and updates, ranking models and performance tuning. Each of these features is designed to improve search quality and deliver a more relevant search experience to our users.

Particularly in this economic climate, identifying and making rich and deep connections with your target audience is of the utmost importance. No company is better prepared to help you succeed in that quest than Yahoo!. In addition to being the largest aggregate publisher in the U.S., we are #1 or #2 across virtually every key category, including being #1 in the categories of News, Sports, Finance and Entertainment, and we’re putting our leadership to work for you every day.

By offering extensive reach to consumers, breakthrough advances in technology, simplifying inefficiencies in the advertising process, putting new and industry-recognized talent in place, and providing tailored solutions across our network to meet your needs, we are well prepared to provide you with the most significant return on your investment.

We are looking forward to continuing to work with you in building your business. Please don’t hesitate to reach out to me or anyone on our team with your questions, or to discuss your challenges. We’re open to a productive dialogue with you in the service of continuing our successful work together.

Warmest Regards,
Hilary Schneider
Executive Vice President, Yahoo! U.S.

Jason McElweenie

For more information please contact the Search Engine Marketing Team at Schipul – sem@schipul.com