Yahoo and Microsoft have finally announced their search deal, after years of negotiation. In short, if the deal is approved by regulators, Yahoo Search will be powered by Microsoft Bing and Yahoo Search Marketing (aka Panama) will be powered by Microsoft adCenter.

BACKGROUND ON DEAL

*  The term of the agreement is 10 years

* Microsoft will acquire an exclusive 10 year license to Yahoo!’s core search technologies, and Microsoft will have the ability to integrate Yahoo! search technologies into its existing web search platforms

* Yahoo! will continue to syndicate its existing search affiliate partnerships.

* Microsoft’s Bing will be the exclusive algorithmic search and paid search platform for Yahoo! sites. Yahoo! will continue to use its technology and data in other areas of its business such as enhancing display advertising technology.

* Each company will maintain its own separate display advertising business and sales force.

* Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. Self-serve advertising for both companies will be fulfilled by Microsoft’s AdCenter platform, and prices for all search ads will continue to be set by AdCenter’s automated auction process.

The search brand at Yahoo will remain to be “Yahoo Search” but it will have a label at the bottom of the page that says “Powered by Bing.” Nothing is changing now, not until they get regulatory approval, and then when they get that approval, they will begin pushing out the integration.

So Bing will now power search on Yahoo! and Yahoo!’s salesforce will sell the premium (non-self service) search advertising for Yahoo!/Bing. Bing also gets access to Yahoo!’s core search technology and can, at its option, leverage that to help create more relevant results.

BOTTOM LINE

Nothing is going to happen until 2010 at the earliest, so you do you have time to prepare.  I would say now that Bing will have a 15-28% share of the market, that it makes a lot of sense to start optimizing for BING now.  In the past MSN was hardly worth optimizing for because they usually didnt send much traffic but now it will make more sense.  A good tool to use to see the differnent results that come up now at Google and Bing, is the Bing v. Google tool.