Vodafone and Yahoo! announced they have formed a strategic alliance to create a mobile advertising business that will enhance the customer experience on mobile phones while providing new revenue opportunities for both companies.

As part of the agreement, Yahoo! will become Vodafone's exclusive display advertising partner in the UK. Yahoo! will use the latest technology to provide a variety of mobile advertising formats across Vodafone's content services. Under the plans, customers who agree to accept carefully targeted display advertisements can expect to enjoy savings on certain Vodafone services. This proposition could extend to key Vodafone mobile assets including the Vodafone live! portal, games, television and picture messaging services.

"Since we announced our intention to develop revenue from mobile advertising as part of our mobile plus strategy unveiled in May, we have carried out extensive customer trials. We will now use the experience to determine with Yahoo! how best to ensure customers, who choose to receive targeted messages, get better value as well as a richer mobile experience. This will also ensure that advertisers are given a compelling proposition," said Nick Read, chief executive of Vodafone UK.

Vodafone and Yahoo! intend to roll out the initiative in the UK in the first half of 2007.