On Thursday, Yahoo reached a deal with Google to advance the company’s open strategy in the search and display marketplace.

Yahoo will run Google-supplied ads alongside its own search results and on some of its Web properties in the U.S. and Canada. The agreement is non-exclusive, giving Yahoo the ability to display paid search results from Google, other third parties, and Yahoo’s own Panama marketplace.

“This agreement provides a source of funds to both deliver financial value to stockholders from search monetization and to invest in our broader strategy to convert display advertising and advance our starting-point objectives with users,” Yahoo President Sue Decker said. “It enhances competition by promoting our ability to compete in the marketplace where we are particularly well positioned: in the convergence of search and display.”

Yahoo’s Strict Control

Under terms of the agreement, Yahoo maintains significant control. For example, Yahoo will choose the search-term queries for which — and the pages on which

— Yahoo may offer Google paid-search results.

Yahoo will define its users’ experience and will determine the number and placement of the results provided by Google and the mix of paid results provided by Panama, Google or other providers. The agreement applies to paid search and substance match and does not apply to algorithmic search. The agreement additionally applies to current partners in Yahoo’s publisher network.

“We believe that the convergence of search and display is the next major development in the evolution of the rapidly changing online advertising industry,” Yahoo CEO and cofounder Jerry Yang said. “Our strategies are specifically designed to capitalize on that convergence — and that agreement helps us move them forward in a significant way. It additionally represents an fundamental next step in our open strategy, building on the progress we have already made in advancing a more open marketplace.”

Enhancing Search Monetization

Yahoo…

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