Forbes Article: Micro -Hoo part two

Seattle -

Microsoft will pull out all the stops this week when it gathers its biggest advertisers in its backyard for its annual Strategic Account Summit. They'll be addressed by company founder Bill Gates, and they'll be wined and dined at some of Seattle's best restaurants. And to cap it all off Microsoft will put them all in front of one of its biggest online competitors--Yahoo! Chief Executive Terry Semel.

This could be interesting.

Semel was booked long before word got out last week that Microsoft's (nasdaq: MSFT - news - people ) on-again, off-again acquisition talks with Yahoo! (nasdaq: YHOO - news - people ) were off-again. Semel probably won't touch on that topic. Nor will he make a naked pitch for the assembled throng to ditch Microsoft and send all their business his way.

Instead, Semel will most likely talk about his favorite topic these days: partnership. There are three smart ways Microsoft and Yahoo! can work together to try to catch up to Google (nasdaq: GOOG - news - people ) in the online ad race that both are losing badly right now. Sadly Semel will probably only touch upon two of them, at most.

One easy option: Get Microsoft to help Yahoo! spread its content around. While Yahoo! has struck deals with hundreds of content providers to grab their stuff and distribute it on the Web, Yahoo! needs to find more distribution outlets. Microsoft could help by agreeing to bake some of Yahoo!'s content and services into Microsoft software powering PCs, game consoles and mobile phones.

Another no-brainer: Yahoo! can offer help getting Microsoft's users in front of display advertisers--i.e., online banners and the like. Microsoft’s money-losing online arm generates plenty of traffic, but when it comes to turning those clicks into cash, it fell further behind after Google bought display advertising specialist DoubleClick for $3.1 billion last month, and Yahoo! followed that up by snapping up the 80% of DoubleClick rival Right Media, that it didn't already own. A deal with Yahoo! could allow Microsoft to take advantage of Yahoo!'s skill at hooking content up with advertisers.