Sorrell: Microsoft/Yahoo! deal will cut online ad costs

Microsoft and Yahoo!’s new 10 year partnership could put an end to high online ad costs and spur trouble for rival company Google, according to WPP’s head Sir Martin Sorrell.

Speaking to the Daily Telegraph, the WPP chief executive said the merger between the two internet companies was likely to make search advertising cheaper as advertisers would have a viable alternative to the main player.

Under the terms of the deal, which was announced on Wednesday, Microsoft will acquire an exclusive 10 year license to Yahoo!’s core search technologies, and have the ability to integrate Yahoo! search technologies into its existing search platforms (see Microsoft and Yahoo! confirm 10-year ad deal).

While Yahoo! will sell premium search advertising, Microsoft’s AdCenter platform will handle self-serve advertising for both companies.

However, each company will maintain its own separate display advertising business and sales force.

The tie-up will give Microsoft around a 30% share of the search advertising market, compared to Google’s significant 65%.