Yahoo and eBay have reached a multiyear advertising and business partnership to better compete against search leader Google, Reuters reports (via Search Engine Lowdown). Their joint efforts will begin this year. Yahoo will be the exclusive third-party provider of graphic ads on eBay's auction site, and will provide sponsored search for complementary products on some eBay.com search results pages. The two companies also said they would work to jointly develop "click-to-call" ad technologies for their websites.

"This partnership with eBay provides us with a great opportunity to further extend our sponsored search and graphical advertising reach to one of the largest and most active communities on the web," Yahoo Chairman and CEO Terry Semel said in a statement.

Through this partnership, Yahoo said, it can add eBay's online inventory, offering advertisers "an optimal marketing experience." Yahoo and eBay have also agreed to collaborate on ways to increase the quality and comprehensiveness of Yahoo search results for eBay listings. Yahoo search functionality and Yahoo site links will be integrated into a co-branded version of the eBay toolbar.

eBay President and CEO Meg Whitman said, "Yahoo offers an engaged online audience, which drives massive traffic through its rich consumer content and premium services. Working together, we can create more exposure for our properties, which in turn makes them more valuable to our users."

As part of the agreement, Yahoo has selected eBay's PayPal to become the exclusive third-party provider of its online wallet, allowing customers to pay for Yahoo services from bank accounts, credit cards or balances associated with their PayPal accounts.

PayPal will be integrated into the Yahoo site - and it will be promoted as Yahoo's payment solution for merchants and publishers, including the Yahoo Publisher Network, Yahoo Search Marketing, Yahoo Merchant Solutions and other small business services.