Search marketing company MIVA yesterday announced that it has chosen to end its partnership with Yahoo! in favour of Google.

Yahoo! had been providing search advertising for MIVA since 2001 but this will end as of January 27, when MIVA will begin a new two year deal with Google.

This is the second such setback for Yahoo! in the past six months, which recently lost a text ad deal with to Quigo.

After a poor 2006, in which it saw its share price fall by 40%, as well as losing search market share to Google, as well as internal strife, Yahoo hopes that the launch of its new Panama advertising platform will allow it to close the gap on its rival.

Greg Sterling of Sterling Marketing Intelligence told MediaPost:

“They (Google) have many, many more advertisers, and they have more coverage. Yahoo!’s network isn’t as extensive, and it becomes more challenging to grow.”

Mr Wave Theory suggests that MIVA’s patent suit with Yahoo! Search Marketing in 2005 was a major factor in the decision.

He also points out that Google offers far greater potential for monetisation than Yahoo!:

“The word in the industry is that Yahoo! is still at 50% of the monetisation rate for keywords which means Yahoo! earns about $.50 per click for every $1.00 that Google generates.”

The deal with Google is good news for MIVA’s shareholders though, as the company’s share price rose by 16% after yesterday’s announcement.