"It's a very positive for both, since eBay gets to monetize its traffic with advertising," said Marianne Wolk, an analyst with Susquehanna.
Monetization denotes a way to create revenue from a property or an asset, in this case by increasing advertising on an internet page.
"Clearly Google and Microsoft, I assume, would have liked this business, but Yahoo has more assets to leverage in a partnership with eBay," said Mark May, an analyst with Needham & Co.
The joint initiative will start later this year.
Shares of eBay climbed 12.19% to $33.88 and Yahoo finished 3.55% higher at $32.92, both on Nasdaq.
The news occurred on the same day that computer giant Dell and internet search engine Google announced that a version of Google's software would be installed on Dell computers at the factory level.