Microsoft has expanded its search relationship with Facebook - while at the same time closing the book on the site's banner ad business.

The search portion of the news expands an earlier agreement to sell these ads for Facebook - now Microsoft will be adding new features and as well as extending search outside of the US. In its battle a greater share of search market with Google, this could be seen as a win for Microsoft. The company has been aggressively using third party search agreements to narrow the gap (via BusinessWeek).

The loss of the banner ad business - which at face value can only be seen as a blow to Microsoft - may have more do with Facebook's own approach to advertising than anything related to Microsoft.

The social media site has built an ad strategy that relies heavily on engagement and other social media-appropriate ads. Facebook runs few banner ads, preferring instead to focus on games or quizzes. As a result Facebook hasn't seen "ad network type CPMs" according to Mike Murphy, Facebook's VP of global media sale (via Media Week).

Microsoft and Facebook have been working together on advertising for a long time, noted Jon Tinter, General Manager of Bing in a blog post announcing the changes. "Given the kinds of advertisements that make sense within a product as unique as Facebook, it just made more sense for them to take the lead on this part of their advertising strategy."