Microsoft, Yahoo and AOL band together to sell each other's available ad space, keeping each other's customers from Google in a classic cooperation/competition play.
Microsoft (NASDAQ:MSFT), Yahoo
(NASDAQ:YHOO) and AOL (NYSE:AOL) Nov. 8 formed an advertising troika aimed at
keeping each other's available graphical ad inventory out of the hungry hands
of Google (NASDAQ:GOOG).
The partners have agreed to sell their
unused display ad inventory to each other's customers beginning in early 2012,
deepening their collective customer pools to improve their chances of selling
ads to customers that aren't served by Google.
Financial terms of the nonexclusive
deals were not disclosed. The Microsoft Advertising Exchange and Yahoo Right
Media Exchange will initially serve as the two marketplaces from which the
partners can resell inventory to advertisers and agencies. AOL may opt to
use its own exchange technology solution subsequent to the launch of the
partnership.
Agencies and advertisers may continue
to choose to partner across Yahoo Network Plus, AOL's Advertising.com and the
Microsoft Media Network if they desire.
Microsoft, Yahoo and AOL argued that
their deal should "dramatically improve the process of buying and selling
premium online display inventory" by reducing friction in the marketplace.
"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."
That may be true, but it's also clear that
Microsoft, Yahoo and AOL as online ad rivals would not strike such a deal if it
weren't for their concern over Google's growing online ad power. Indeed, as
part of their deals, the companies said each company will set its own controls
for how it operates any exchanges, ad networks or other aspects of its display
businesses.
In a classic case of
"cooptition," the companies will also "actively compete with
each other for both advertiser spend and publisher partners based on their own
unique product differentiators."
This is an important distinction to
help the trinity steer clear of accusations of collusion, which would draw
unwanted attention from the Justice Department, which frowns upon deals it
believes limit consumer choice.
Google, which is itself under antitrust
scrutiny by the Justice Department and European Union for its search and
ad practices, has long held the dominant position in search ads at roughly
90 percent of the market. The search engine giant also unseated Yahoo as the
market leader in display ads, according to IDC.
IDC in May said Google's U.S. display ad revenue share grew
to 14.7 percent in the first-quarter 2011 from 13.3 percent from the
fourth-quarter 2010. Yahoo's display ad share fell to 12.3 percent from 13.6
percent in the prior quarter. At the time, IDC analyst Karsten Weide said
Google's Display Network would exert more pressure on Yahoo, Microsoft and AOL.
The new pact by those companies
underscores just how pressured those rivals feel by Google, which began
fortifying its once weak display ad position by acquiring DoubleClick in 2007,
forging the Google Display Network and deploying display ads on its YouTube
property.
Facebook has also come on strong in
display ads, and expects to grab even more against Google and the others as it
improves its social ad selling.
Email
Print
