Reports continue to surface on the potential Yahoo/Microsoft deal. The latest came yesterday from Kara Swisher at Boomtown who has been following this drama for some time. Her latest report suggests that the current proposal would have Yahoo taking over search and display advertising sales with Microsoft running the backend tech.

While it’s too early to say whether or not this thing will actually go through, it’s an interesting possibility to consider. A deal between these companies would have significant implications for the search marketing business.

The current situation, three major search engines, each with its independent advertising system, is cumbersome. Logging into each system individually to make updates, changes, additions, and pull reporting adds significant time to the management process. As if the inefficiency of having three separate systems wasn’t enough, two of them are idiosyncratic and limited when compared with the gold standard (ahem, Google AdWords).

If a deal goes through, that situation could, theoretically, be improved. Consolidation of ad systems, if implemented well, would likely be welcomed by most in the industry. It would also be likely to have a favorable effect on both Yahoo and Microsoft’s bottom line. Currently, many advertisers don’t bother with one or both of those engines because they feel the time it takes to manage another system isn’t worth the incremental bump in traffic they would get (among other reasons). A unified system would provide more bang for the buck and less hassle overall.

We have to wonder though, if a deal went through, which system would they use? Microsoft’s AdCenter, Yahoo’s Sponsored Search, or something new? Historical precedent says that a new system would be probably be a poor choice. As we mentioned, neither company has built a truly great search ad system and there’s no reason to think the two combined would produce something better. If that’s the case, then Microsoft’s platform seems to be the most likely choice (based mainly on the above report that Microsoft would handle the tech side). Feelings are mixed on that selection in our office. Perhaps when the time comes to decide, they could make like Facebook and poll their users.