With Microsoft out of the picture, everyone's expecting Google and Yahoo to strike a deal for Google to broker the ads that appear on Yahoo's search results. If true, that's bad news for advertisers. One reason outsourcing search to Google is so appealing to Yahoo is that Google is so much better at pitting advertisers against each other and ratcheting up how much they're willing to pay per click. While it varies from keyword to keyword, one source estimates Google gets away with charging about 25 percent more per click than Yahoo does for ads on the same search results. Our source says clients will be glad to use Google's platform because it's simply "better," but it won't make up for losing the Yahoo discount.
(Illustration by dannysullivan)