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When brand new CEO Carol Bartz told the world that search is a "very valuable part" of Yahoo!'s business, she meant it.

Today, the struggling web portal introduced new money-making tools that allow advertisers to target web display ads according to user search activity. So, in addition to serving you ads in direct response to each of your search queries, Yahoo! will also use your collective keyword history as a way of filling your browser with (ostensibly) relevant banner ads when you visit other Yahoo! properties and partner sites.

This is why Yahoo! is reluctant to anonymize your search logs.

Yahoo! calls it "search retargeting" - not to be confused with two other ads tools introduced this morning: "enhanced retargeting" and "enhanced targeting." With enhanced retargeting, advertisers can serve you ads based on what you do on their websites. With enhanced targeting, they can hit you with good ol' search ads based on where you are in the world and your "demographics."

You see, if you also have a Yahoo! account, the company may know your gender. And how old you are.

"As the economy continues to put pressure on advertising budgets, marketers are looking for increased accountability for every dollar they spend. Yahoo!'s new targeting products significantly improve the ability for search and display advertisers to reach their target audience, providing increased efficiency and accountability," reads a canned statement from Michael Walrath, senior vice president of Yahoo!'s advertising marketplaces group.

"Yahoo! remains incredibly well positioned to meet the growing advertiser demand for performance marketing offerings, and no other company can provide marketers with such scale and expertise across search and display advertising."

Google might argue with that. But Yahoo!'s announcement - made today at an ad conference in Orlando, Florida - would seem to fortify Carol Bartz's claim that search is still an important part of Yahoo!'s future.

During her inaugural Yahoo! earnings call, Bartz couldn't help but ask herself if she would "immediately" sell Yahoo!'s search business to Steve Ballmer and Microsoft. She didn't answer yes or no. But she insisted that search is "a very valuable part of our business. Understanding the intent and goals of our users as they seek information online is extremely useful to our franchise in many ways."

Ah, but Ballmer is still hopeful he can pull off some sort of MicroHoo pact. Speaking with industry analysts earlier today at Microsoft's annual "Strategic Update," Big Steve mentioned Yahoo! several times during a rambling monologue on the search market - which is dominated by Google.

"You all know that I would like to figure out how to pool somehow Microsoft and Yahoo. I'm not talking about doing an acquisition, blah, blah, blah, back to search deals, blah, blah, blah, I don't know if anything is going to happen," he burbled.

"I'll short-circuit the whole conversation, but the fact of the matter is, these two guys [We think he means Microsoft and Yahoo! - Ed] should somehow figure out how to get together and create more competition for this guy [We think he means Google - Ed]. And I'm hoping perhaps that that's a reasonable conversation to have with new management at Yahoo as Carol comes onboard."

Meanwhile, Yahoo! is already testing keyword-driven search ads that include video and other "rich" content, further blurring the line between its search and banner ads. ®

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