Rumors that Yahoo! has been quietly testing a contextual advertising program for blogs and small publishers to rival Google's Adsense have been circulating the blogosphere in part because of contextual ads that were spotted on the blog of Ken Rudman, a product manager at Overture.

UBS also released a report upgrading Yahoo!'s stock to "buy" from "neutral," based partly on UBS's expectation "that Yahoo will aggressively expand its Content Match product to compete with Google's Adsense product."

Content Match displays ads based on the content pages of partner Web sites. If a marketer, say, buys the keyword "chocolate," an ad will show up next to articles containing the word "chocolate," rather than on search pages called up after the term "chocolate" is typed into the search box.

The UBS report, authored by analyst Benjamin Schachter, stated further: "Though Yahoo! already has a contextual product, Content Match, it is currently limited to large publishers & We believe Yahoo! is planning on expanding the product so that small to mid-size publishers will have access to Yahoo ads in much the same way that Google has with its Adsense product.

The Yahoo! source would neither confirm nor deny that the company had small to mid-size publishers like blogs in mind, saying only that Yahoo! intended to expand and improve its current offering.

The expanded offering would theoretically add incremental revenue for Yahoo!. Jupiter Research analyst Niki Scevak was lukewarm over any looming Yahoo! Adsense-like offering, explaining that the money at stake is negligible at this stage. "We don't know what it's done for Google because they haven't told us, but I don't think it's much," Scevak said.