Microsoft (NSDQ: MSFT) has struck a deal with online video ad network YuMe that’s designed to move unsold inventory across Microsoft’s web properties. The arrangement also intends to provide improved services to advertisers. Working with YuMe also offers a clue to Microsoft’s ad strategy in the wake of the latest collapse of its talks with Yahoo (NSDQ: YHOO), by concentrating on alliances with and investments in smaller partners that can round out its offerings. The deal is also a big boost for YuMe, which launched a little over a year ago. The Redwood City, CA.-based company tends to tout its targeting abilities and has signed up a number of small web publishers in recent months, along with one other prominent name, NBC.com. The ad net will package Microsoft’s excess video ad inventory as part of YuMe’s collection of channels (e.g., news, sports, entertainment, etc.) for MSN’s distinct channels as well. Financial terms weren’t disclosed. Release

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—WSJ: Microsoft will use YuMe’s ad serving when it identifies a video that’s getting a lot hits—such as Super Bowl ads or a video tied to breaking news. So when traffic surges on a Microsoft site, leading to demand for ads that Microsoft’s system can’t handle on its own, YuMe’s system will kick in.