After much speculation, Yahoo! has now agreed a deal with Google to carry their search advertising in return for a revenue share. As reported by many news agencies, including Reuters, the deal forms a non-exclusive partnership and Yahoo! say they have made this move after failing to agree a deal with Microsoft who had revised their earlier acquisition approach to now buy just Yahoo!'s search business.

Under the new arrangement with Google (which follows an earlier trial period), Yahoo! will run Google's AdSense PPC adverts alongside its own search results and on some of its websites, but only in the United States and Canada for the time being. Yahoo! will also retain control over where the Google ads will run and which search terms will be used - there is more information published by Google on their official blog. The deal has been agreed to initially cover four years, with options to renew it up to a period of 10 years.

Yahoo! must see this as part of a rescue plan for its ailing business since it expects the deal to create an additional $250 million to $450 million operating cash flow within the first year. However, within the brief press release there is no mention of what impact this arrangement will have with Yahoo!'s own PPC service and for the advertisers currently running accounts in these regions, but it seems to indicate that Yahoo! expect to make more from this model than developing their own service. More on this should become clearer over the next few weeks or months.