In Friday's statement, Microsoft indicated that one of the key factors driving the decision to make the unsolicited bid for Yahoo was the growing revenue generated by online advertising. "The online advertising market is growing at a very fast pace, from over $40 billion in 2007 to nearly $80 billion by 2010," said Steve Ballmer, chief executive officer of Microsoft.

"The resulting benefits of scale along with the associated capital costs for advertising platform providers make this a time of industry consolidation and convergence," he added.

Ballmer pointed out that the online ad market is "increasingly dominated by one player", namely Google. According to the most recent company figures, Google's online ad revenue was $4.8 billion, while Yahoo's was about $1.7 billion and Microsoft's a mere $863 million.

In the past few years, issues such as keyword advertising and popup ads linked to online ads have become a major concern for IP owners, and Microsoft's bid seems to indicate that it believes the market for such ads will expand even further.

Yahoo also recently announced that it would cut 1,000 jobs, projecting disappointing fiscal forecasts for 2008.

According to global brand consultancy company, Interbrand, Yahoo's poor performance may be related directly to its brand strategy.

In its survey of the top 100 global brands, Interbrand said: "[Yahoo's] pursuit of co-branded partnerships may have seemed attractive in purely financial terms, but this detracted from the company's sense of self, causing the brand to fade."

Google on the other hand has managed to maintain brand integrity according to the report: "From relatively obscure and humble beginnings, [Google] has grown dramatically, achieving 45% year over year growth in brand value since 2005. Despite rapidly expanding its offering beyond search to encompass a range of other added-value services (such as news, financial information and geo-mapping), Google has managed to maintain a sincere and consistent feel to everything that it does."

Interbrand ranked Microsoft the second best overall global brand, while Yahoo ranked 55 and Google 20.

Meanwhile, Nielsen's statistics reveal that Google is rated the number one online web brand and Yahoo number two, while Microsoft comes in fourth.

Were Microsoft to acquire Yahoo, it is unclear whether it would maintain the Yahoo brand.

A Yahoo press release said that the company's board of directors "will evaluate this proposal carefully and promptly in the context of Yahoo!'s strategic plans and pursue the best course of action to maximize long-term value for shareholders."