Yahoo, Microsoft and AOL partner in an Advertising Deal

by on September 15th, 2011

Yahoo, AOL and Microsoft  have earlier competed with each over digital advertising revenue, but now these 3 companies have teamed up in an unusual partnership in which they plan to sell ads for one another. The three companies are going to start selling ad inventory on each others’ sites, and challenge Google, which currently dominates the advertising market, reports AllThingsD.

According to the reports, the officials from the three companies briefed a group of top Web publishers and ad buyers about the plan at a dinner presentation last night in Manhattan. AOL, Yahoo and Microsoft also hope to convince other online publishers to join their partnership. By joining together and selling for one another, they hope to reduce the need for third-party ad networks that used to sell ads  on their sites.

The reports state that Microsoft, Yahoo and AOL have agreed to sell each other’s “Class 2 display” inventory — graphic ads the companies can’t sell on their own and would normally hand over to ad networks.

“What they are trying to replicate is the growth of private exchanges. The exchanges offer a buyer accurate targeting, brand safety and good pricing for good reach ,” said David Hallerman, a principal analyst for eMarketer, a digital market research firm.

The revenue earned through advertising will be shared between the three companies and they  hope to earn more than what they would have, with a third-party ad network selling their products. The plan, according to the reports, will start by the end of this year. The deal doesn’t require exclusivity from any of the players and doesn’t prevent the members from working with any ad tech company, including Google.

According to the data from eMarketer, Google dominates the search advertising marketplace, currently, with nearly 76 percent market share. It accounts for about 9 percent market share in display, with projected revenue of about $1.1 billion. The projected display advertising revenues for Yahoo, AOL and Microsoft combined would be around $2.7 billion.

 

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