Yahoo, eBay Team Up

In an effort to win more online advertising dollars and shore up defenses against growing competition, Yahoo and eBay said today that they've formed a new partnership.

The announcement follows weeks of speculation surrounding potential tie-ups between a variety of online leaders.

The partnership comprises several deals, including that Yahoo will exclusively provide all graphical advertisements on the eBay.com Web site. Yahoo will also provide sponsored and improved search for some eBay search result pages and offer more up-to-date results from eBay's Web site to customers using Yahoo to search the Web.

As part of the agreement, PayPal, a division of eBay, will begin exclusively providing online payment services for users of Yahoo services and offer payment options for Yahoo merchants and publishers.

More to Come

Yahoo and eBay also said they'll explore click-to-call advertising technologies, a market that is increasingly attracting attention online. The technology allows Web users to click on an advertisement and be connected via a VoIP (voice over Internet Protocol) call to the advertiser.

The companies will also introduce a co-branded version of the eBay toolbar, which will include links to Yahoo Mail and the Yahoo home page.

Yahoo and eBay said they'd start testing some of the initiatives in the next couple months, with plans to implement all of them next year.

eBay, Yahoo, Microsoft, and Google are among the online powerhouses hoping to hit on the best business model for profiting from the quickly evolving Web. Many of the players have branched out recently into each other's initial markets. For example, Microsoft recently introduced a new online advertising platform similar to one run by Google and said it will use the new platform on its Web sites instead of relying on an engine previously provided by Yahoo. All four companies operate competing VoIP services and aim to earn revenues through advertising by driving traffic to their Web sites.

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