WebProNews

Yahoo is testing the use of favicons in sponsored ads. When a user searches for your domain name, your favicon will appear in your sponsored result.

Yahoo looks at the example of Expedia. You can see how it looks in the following screenshot:

"What good does that do anyone?" asks Yahoo's Jeff Sweat. "Well, it’s just one more way for users to know they’re really looking at your site, which will improve the search experience. And if they know you’re really what they searched for, they may click on you more frequently, helping your click-through rate and improving your quality score."

A couple months ago Google began testing Favicons in AdWords ads as well. We have not heard much more about this, but at the time, they were only testing them in Europe. 

Favicons add just a little bit of branding to an otherwise bland text ads, and I see no reason why advertisers would not want their logo to appear next to their sponsored search results.