When Microsoft launched its Bing decision engine in 2009, it may have held out hope for an alliance with AOL. In fact, there were even rumors that Microsoft would buy out the struggling Internet service provider. But AOL has shunned Bing in favor of Microsoft's online nemesis, Google.

On Thursday, Google announced a five-year renewal and expansion with AOL. Google will continue providing search services to AOL's global content network, including all its properties. In return, AOL will get an undisclosed share of the search advertising revenue. In the new deal, Google will also include mobile search and YouTube.

"This agreement combines Google's expertise in search and advertising with AOL's strength in online content," said Eric Schmidt, chairman and CEO of Google. "It's particularly exciting to see our relationship expand into video and mobile. These areas are now at the heart of users' online experiences and at the core of both of our businesses."

New Search Trends

The renewed partnership includes new features that aim to improve and expand the Google products and services AOL users can tap into. Of course, it all starts with search products. Google is enhancing its search to improve the consumer experience across AOL's network of sites. On the advertising-products front, Google will provide AOL with ad formats that promise AOL consumers a better, more relevant ad experience.

Over the past 10 years of the Google-AOL relationship, search and video have become hot trends in the search market. The new five-year deal takes those trends into account. As AOL renews its focus on mobile apps and content, the companies said they will work together to expand the alliance to cover mobile search. And AOL and YouTube have agreed to a content partnership that will bring AOL's video content to YouTube.

"Today is another important step in the turnaround of AOL," said AOL Chairman and CEO Tim Armstrong, promising AOL users a better search and search-ads experience. "All aspects of our partnership will be improved by this deal."

AOL Shopped Around

Google bought a five percent stake in AOL for $1 billion, and Armstrong joined the company after leaving Google last year. Still, Armstrong said the company talked to a handful of potential search partners before renewing with Google. Greg Sterling, principal analyst at Sterling Market Intelligence, sees wisdom in AOL's decision.

"This deal makes sense for AOL in a big way because AOL has the existing relationship and integration with Google. This is the path of least resistance. There's no change that needs to be made. There's no new team, no new system. It minimizes glitches and the potential disruption of switching to Microsoft," Sterling said.

"Also, AOL has a big new mobile push. Google has a lot of inventory that will benefit AOL on that front. For Google, it gives them many more opportunities for clicks and contextual advertising. Assuming that AOL can get some traction in mobile, it could be beneficial for Google."

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