Microsoft to Rep Search and Display Ads for Verizon Wireless

Microsoft will distribute Live Search results and advertising to Verizon Wireless customers under a five-year deal seen as a blow to search rivals Google and Yahoo.

The agreement, announced by Microsoft CEO Steve Ballmer at the International Consumer Electronics Show in Las Vegas, will take effect in the first half of this year. In addition to search advertising, Microsoft will handle display ad sales for Verizon’s Mobile Web service.

John Stratton, Verizon’s chief marketing officer, said in a statement that the sale of data services now accounts for more than a quarter of the company’s revenue. “Getting wireless search and advertising done right is critical to continuing to make wireless content relevant to our customers and our business,” he said.

Yahoo, Google and Microsoft are competing to distribute search, content and ad services to the major carriers. Yahoo’s mobile search and Web ambitions got a boost last year through a deal with AT&T Wireless. Microsoft has an existing deal with Sprint.

Google was the original favorite to win the Verizon business. But during the fall, reports began to surface that Microsoft was aggressively courting the carrier, which will be the largest in the U.S. — as measured by number of subscribers — once it completes its acquisition of AllTel.

The losers in these deals are white label search providers such as JumpTap and Medio, which have served the mobile companies and seemed well positioned to monetize their burgeoning traffic and search activity. These firms are now being left in the cold as the major Internet players offer large guarantees to operators in return for exclusive relationships.