In an attempt to recover from an unsuccessful bid for Yahoo and a predicted heavy cost to combat with Google face-to-face, Microsoft has announced an alliance with online social networking giant Facebook.

In all sorts of pressure, Microsoft executive Kevin Johnson, who had incidentally led the pursuit of Yahoo, left the company all of a sudden recently, couple of days after Yahoo reached a ceasefire with billionaire Carl Icahn that removed the instant pressure on it regarding an agreement with the software maker.

Adding to the woes, Microsoft has also countered fresh doubts on Wall Street concerning its online strategy following the revelation that it will incur costs faster than expected in the coming 12 months, somewhat due to online-based investments.

With all sights on healing the wound suffered from the failure of Yahoo bid, Microsoft revealed its plan to strike a deal with Facebook to place its search service along with search-related advertising on the networking domain.

Chief executive Steve Ballmer said that attracting a higher volume of user traffic would augment the effectiveness of Microsoft’s search technology and enable it to provide more relevant adverts to users.

On the other hand, the partnership comes at a critical juncture for Facebook as well, which surpassed MySpace lately and became the world’s biggest social network by users. This is because the company struggles to prove that it can create new revenue sources to substantiate the enormous expectations for it. Moreover, those expectations have said to reach fever pitch in the previous year after Microsoft invested $240 million that valued Facebook at massive $15 billion.

Good news for Facebook is that the display advertising offered by Microsoft is anticipated to contribute a major part in Facebook’s sales this year. It is alleged that Facebook is forecasting sales of around $350 million this year, which is up from approximately $150 million previous year.

Finally, Facebook stated that the agreement was at an early stage and that no decision has been made as to how Microsoft search would be included into the Facebook website. Moreover, the terms of the deal remained sealed.