CEO Jerry Yang

The Wall Street Journal reports that CEO Jerry Yang has decided against "outsourcing" its paid search advertising arm to competitors Google or Microsoft.

Yahoo, which purchased the pay-per-click ad company Overture in 2005, has invested much, with mixed results, into the paid search advertising sector.

In 2006 it overhauled the traditional Overture bid model for something more Adwords in style. And in early May, there was even talk of a Microsoft/Yahoo search ad merger.

But sources say Yang decided Yahoo's value add is to be the "marketing operating system," to which advertisers can turn for a full array of online advertising options.

Search advertising comprises approximately 40 percent of the United States online advertising market, according to another source.

Recently Yahoo purchased the Blue Lithium ad network, an acquisition expected to improve its behavioral ads offering.