News

Microsoft Enters Display Ad Deal with Yahoo, AOL

• By Kurt Mackie
• November 10, 2011

Microsoft, Yahoo and AOL have entered a publisher partnership deal to cross-sell their inventories as part of a collaboration on Web-based display ads.

Under the deal's terms, the companies will each agree to provide customers access to their owned-and-operated (O&O) premium inventories.

According to Rik van der Kooi, corporate vice president at the Microsoft Advertising Business Group, the deal will let Microsoft offer its advertiser customers broader choice. "Similarly, Yahoo and AOL will now be able to offer Microsoft's O&O and third party inventory to their own advertising customers, and deliver commensurate value to their publisher partners, as well," he stated in a blog post.

Display ads occupy screen real estate and typically use static or animated graphics on Web sites. The other kind of Web advertising is search text ads, typically plain text returned with search results. This deal is associated with display ad inventories from AOL's Advertising.com, the Microsoft Media Network (which includes MSN and Fox Sports sites) and Yahoo Network Plus.

Excluded from the deal is Google, the No. 1 search provider, which makes most of its revenues through text ads and also has a display ad business. Google is not the top display ad seller, however: In the U.S. market, of the 1.11 trillion display ads shown in the first quarter of this year, a third were delivered by Facebook, according to stats compiled by comScore. Yahoo is second in the U.S. market with about 10 percent, followed by Microsoft (4.8 percent) and AOL (3.0 percent). Google trails them all with 2.5 percent display ad impressions in the U.S. market.

The deal between Microsoft, AOL and Yahoo came about, in part, because it solves interoperability issues.

"Previously, our networks and exchanges didn't 'talk' to each other very well and were unable to effect inventory transactions between parties," van der Kooi explained. "Now they'll be able to do just that."

The display ads are priced via the Microsoft Advertising Exchange and the Yahoo Right Media Exchange, which use real-time bidding technologies. These inventories can then be resold to ad agencies and advertisers via partners. Under the deal, AOL will have an option to use its own exchange technology instead of those of Microsoft or Yahoo.

The partnership extends across sites in the United States. However, according to an announcement issued by Microsoft, "Yahoo and AOL will have an agreement that extends to Canada."

The Microsoft Advertising Exchange started to use a "real-time-bidded platform" from AppNexus in March 2011, according to van der Kooi. That technology has allowed the exchange to expand beyond U.S. and Canadian markets. The Microsoft Advertising Exchange now also supports the United Kingdom, Belgium, France, Germany, Italy, the Netherlands and Spain, he explained.