If you are a late bloomer than you should know that on July 29th Microsoft and Yahoo made a deal; Yahoo will give up on Search as a Search Engine that is.  What exactly do I mean?  Well, what this means is that Yahoo will no longer have a search engine as all Yahoo search features will now be powered by Bing.

The new ‘YahBing’ (you heard it here first folks) has high hopes of being rolled out early 2010.  Long story short here Bing will be the search provider for both Yahoo and Bing (naturally) and Yahoo will share in the ad platform revenue.  Here is the kicker, there was no money exchanged; a simple merger of powers.

From what’s available to date here are some of the highlights from the Microsoft Bing and Yahoo Search agreement:

- 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;

- 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.

- 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.

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

- Yahoo! will innovate and “own” the user experience on Yahoo! properties, including the user experience for search, even though it will be powered by Microsoft technology.

- Microsoft will compensate Yahoo! through a revenue sharing agreement on traffic generated on Yahoo!’s network of both owned and operated (O&O) and affiliate sites.

- Microsoft will pay traffic acquisition costs (TAC) to Yahoo! at an initial rate of 88% of search revenue generated on Yahoo!’s O&O sites during the first 5 years of the agreement.

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

- Microsoft will guarantee Yahoo!’s O&O revenue per search (RPS) in each country for the first 18 months following initial implementation in that country.

- At full implementation (expected to occur within 24 months following regulatory approval), Yahoo! estimates, based on current levels of revenue and current operating expenses, that this agreement will provide a benefit to annual GAAP operating income of approximately $500 million and capital expenditure savings of approximately $200 million. Yahoo! also estimates that this agreement will provide a benefit to annual operating cash flow of approximately $275 million.

- The agreement protects consumer privacy by limiting the data shared between the companies to the minimum necessary to operate and improve the combined search platform, and restricts the use of search data shared between the companies. The agreement maintains the industry-leading privacy practices that each company follows today.

The concept of this merger/agreement is to complement each other’s strengths into a sustainable platform that can actually compete with the Big Boy.  This agreement may Change The Search Landscape as we know it.

“Microsoft CEO Steve Ballmer said the agreement will provide Microsoft’s search engine, Bing, the scale necessary to more effectively compete, attracting more users and advertisers, which in turn will lead to more relevant ads and search results.”

“Through this agreement with Yahoo!, we will create more innovation in search, better value for advertisers, and real consumer choice in a market currently dominated by a single company,” said Ballmer. “Success in search requires both innovation and scale. With our new Bing search platform, we’ve created breakthrough innovation and features. This agreement with Yahoo! will provide the scale we need to deliver even more rapid advances in relevancy and usefulness. Microsoft and Yahoo! know there’s so much more that search could be. This agreement gives us the scale and resources to create the future of search.”

“This deal fits the long-term strategic direction of Yahoo! to remain the world’s leading online media company and Carol Bartz has the full and unanimous support of the Yahoo! Board behind this deal,” said Roy Bostock, chairman, Yahoo! Inc. “This is a significant opportunity for us. Microsoft is an industry innovator in search, and it is a great opportunity for us to focus our investments in other areas critical to our future.”

So what does all this mean: I suppose this is just one more reason for search engine optimizers to hustle on testing the Bing algorithms to see what kind of feed it likes best.  Since Bing is so new, there is no sure fire way to know what it wants.  I still see plenty of similarity between the MSN algorithm and Bing algorithm; many of the performing keywords I monitor have been stable between the MSN and Bing switch.  In other words, my organic rankings within Bing were almost identical to those of MSN.

I have seen a minor surge of Bing traffic however I am confident that this is simply due to the hype behind the platform and the billions of dollars being thrown against to the wall to promote it.  Interestingly enough, I am curious to know how exactly my analytics will report once Bing takes over Yahoo.  In other words, will I even see organic results from Yahoo or will they all be from Bing?

Only time will tell I suppose, should be a fun ride I have to admit.  I’m actually looking forward to the merger between Microsoft Bing and Yahoo.

How bout you? Who do you think benefited the most in this agreement?  Are you ready to dive into Bing sooner than you thought?