Yahoo and Adobe are working together to allow publishers to run dynamically generated ads on PDF files posted on the web or distributed via email, opening up a new frontier in online advertising.

Until now, publishers have been able to embed only static ads on PDF files, but Yahoo and Adobe are developing a system to make those documents display contextually relevant ads delivered on the fly from Yahoo's inventory at any given time.

On Thursday, the companies will announce the initiative, called Ads for Adobe PDF Powered by Yahoo, and launch a limited beta program that they hope to open up more broadly later.

The inclusion of pay-per-click text ads on PDF (Portable Document Format) files will give publishers another revenue-generating option for the content they have in this popular Adobe document format, said Kurt Garbe, entrepreneur in residence for advertising at Adobe.

As the practice of charging for content continues to dwindle industry-wide, publishers need to monetize their free content with advertising, which has been a challenge for PDF files, Garbe said. "This is a straightforward service to let publishers insert dynamic ads into PDF content," he said.

The benefit for advertisers: They get a new channel for their ads. Readers will benefit when publishers offer for free documents that they previously charged a fee for, or that they simply didn't make available online.

At this beta stage, the program will provide ads from the Yahoo network exclusively. Garbe declined to comment on whether the program will later be open to other ad providers like Google.

It's not a surprise that Adobe would want to be vague about letting other ad providers into the program, since it shouldn't close the door on that possibility, said Matt Swain, a senior analyst at InfoTrends.

However, for now, the partnership is a very good match, and even if Adobe partners with other ad providers later, Yahoo will have an advantage, Swain said. "PDFs are a widely used document format, so this is a big untapped area for advertising," he said.

This is how it will work: Publishers will upload to an Adobe/Yahoo portal the PDF files on which they want to display dynamic ads. The vendors will send the files back after reconditioning them to display dynamically generated Yahoo text ads whenever a Web site visitor calls them up.

Adobe and Yahoo envision simplifying the process in the future, Garbe said. For example, APIs are planned to automate the uploading of PDF files to the Adobe/Yahoo portal, and it's likely that Adobe will build in functions in the PDF creation software so that publishers can generate documents with the advertising capabilities.

The ads will appear on a panel adjacent to the document's text so that they don't disrupt the reading experience. When readers click on an ad, a separate browser window will open with the advertiser's web page.

Josh Jacobs, Yahoo's vice president of publisher solutions, said that while the program is now limited to text, pay-per-click ads, it might be expanded to include other formats, such as graphical and rich media.

The service is free for publishers, who don't need to buy or install any software for it. At this time, only US-based publishers whose sites are in English can participate in the program. To apply for inclusion in the beta, publishers can sign up at this site.

For Yahoo, whose pay-per-click ad business lags behind Google's and hasn't fulfilled expectations, gaining access to PDF documents for its ads inventory could be a major boost.

Publishers will get some control over the ads appearing on their documents. For example, publishers will be able to block ads from up to 200 URLs at the domain and subdomain level.

The more control Yahoo can give publishers, the better, InfoTrends' Swain said. The PDF format, ideal for clean and elegant layouts, is often used for formal documents, such as scholarly articles, so it follows that publishers would be sensitive about having appropriate ads in them, he said.

PDF documents that already have static ads on them can be tweaked to display the interactive ads and display both types at the same time, the vendors said.

Situations in which the ads will not be displayed include if the user is offline when opening the document or the user prints out the document. Users can also close the ad panel if they wish.