• July 25, 2008

Facebook has extended its ad agreement with Microsoft to include search and search advertising, the software giant announced Thursday. The social network currently doesn't offer Web search to users.

Under the deal, the companies will jointly develop the best integration of Microsoft's Live Search for Facebook. The service is expected to launch by year's end.

As part of its $240 million investment in Facebook last year, Microsoft earned the right to sell the site's U.S. and global display inventory. Having failed to reach a deal on search with Yahoo, Microsoft is even more focused on expanding its reach in that area. Microsoft has less than a 10% share of the search market dominated by Google.

"This deal allows Microsoft to extend its search presence outside of its own proprietary search results page ... a smarter play than bribing them through its cashback program to patronize Live.com, wrote Shar VanBoskirk, a principal analyst at Forrester Research, in a post Thursday on the firm's blog for interactive marketing professionals.

In May, Microsoft said it would offer cash rebates to consumers who buy products while searching on Live.com.--Mark Walsh