eBay approached Yahoo to discuss working together more closely on advertising, said Yahoo Chief Executive Terry Seme
As previously reported, under the deal with eBay, Yahoo will become the exclusive third-party provider of all graphical ads on eBay and will also provide new text ads on some search results pages. Yahoo search and site links will be integrated into a co-branded version of the eBay toolbar.
Meanwhile, eBay's PayPal service will be the online payment method used by Yahoo customers, merchants and publishers and will be integrated into product offerings. The two companies will also explore co-developing their respective voice over Internet Protocol (VoIP) services. That project will look at releasing "click-to-call" ad technologies on their Web sites, using both Yahoo Messenger with Voice and eBay's Skype service.
Both Yahoo and eBay have seen increasing competition in their core markets, most notably from big hitters Microsoft and Google.