Microsoft, Yahoo! and AOL Unveil Ad-Selling Alliance

Yahoo Inc, Microsoft Corp and AOL Inc. finally agreed to a display-advertising-selling deal that has been in the works for months as Google and Facebook’s online ad dominance grows.

In a deal announced Tuesday, the three tech giants said they would pool their resources to sell leftover ad space beginning in January. Photo: 2Cauldrons/Flickr

Yahoo! Inc, Microsoft Corp and AOL Inc. today announced agreements that should dramatically improve the process of buying and selling premium online display inventory in a bid to slow Google’s growing momentum in display ads.

The plan, first revealed by AllThingsD’s Peter Kafka almost two months ago, is apparently in response to the Google’s rapid growth in revenues from sales of display-ad space on YouTube and its own AdSense network of partner Web sites.

The agreements will allow ad networks operated by the three tech giants to offer each other’s premium non-reserved online display inventory – known as display ads – to their respective advertising customers.

Display units are big splashy units that appear on Web pages and attract marketers interested in branding their products or services. Typically, these ads command higher rates.

While agencies and advertisers can continue to choose to partner across Yahoo! Network Plus, AOL’s Advertising.com and the Microsoft Media Network, this partnership will also offer the efficiency of buying premium display inventory at scale to reach customers and audiences.

Simultaneously, the partnership should enhance the demand for and value of each party’s display advertising offerings as well as provide better yield for both participating publishers and advertisers.

“We’re thrilled to partner with Microsoft and AOL and bring to market what we believe will be a more efficient, effective and more effortless way to access true premium inventory and formats,” said Ross Levinsohn, Yahoo! executive vice president Americas.

“There has a been a significant shift in how inventory is bought and sold, and we’re now 100 percent focused on controlling our own destiny, working directly with marketers and agencies and driving better returns for our advertising partners.”

“Enhancing choice and scale in today’s display advertising market is ‘a rising tide that lifts all boats’,” said Rik van der Kooi, corporate vice president of the Microsoft Advertising Business Group.

“This partnership will create an opportunity where advertisers and publishers alike can benefit from easier access to — and demand for — high-quality inventory. The fact that we’re joining together to offer this kind of access to quality — yet each with our own differentiated ad offerings — is something that will benefit the market as a whole.”

“We are excited to be part of this partnership,” said Ned Brody, chief revenue officer, AOL. “Today’s announcement sets in motion the opportunity for advertisers to achieve scaled solutions across premium publishers.”

“This should reduce friction in the marketplace, which will benefit both advertisers and publishers. And this partnership will take our existing Advertising.com partnerships with both Microsoft and Yahoo! to a new level,” he added.

By integrating one another’s real-time bidding (RTB) technologies to facilitate the availability of nonreserved inventory by early 2012, Yahoo!, Microsoft and AOL expect to have the opportunity to access each other’s nonreserved inventory to achieve the benefits of scale and efficiency.

The Microsoft Advertising Exchange and Yahoo’s! Right Media Exchange will initially serve as the two marketplaces from which the partners can procure this inventory for resale to advertisers and agencies. AOL may, at its discretion, opt to use its own exchange technology solution subsequent to the launch of the partnership.

Under the terms of the nonexclusive agreements, each company will continue to make its own decisions, differentiate its offerings and set its own controls for how it operates any exchanges, ad networks or other aspects of its display businesses. They will actively compete with each other for both advertiser spend and publisher partners based on their own unique product differentiators.

Effective in the United States, the partnership is based on the premise of audience-based selling across a large number of sites and is not expected to affect direct sales made by each partner’s respective internal teams.

Both Facebook and Google Inc are expected to increase their share of online display advertising in the United States in 2011 by 9.3 percent and 16.3 percent respectively, according to estimates from research firm eMarketer.

Meanwhile, AOL, Microsoft and Yahoo are forecast to loose share, with Facebook expected to surpass Yahoo for the first time this year. [via Reuters]

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