ChanPark Report: Yahoo, Microsoft and AOL to Sell Display Ads Together

Singapore (I-Newswire) November 21, 2011 - Yahoo Inc., Microsoft Corp and AOL Inc. have joined hands to sell online advertising space, in a bid to compete with growing influence of internet search titan Google. The partnership would allow each of the three companies to sell each other's unsold premium advertising inventory, dubbed as display ads, by early next year in order to achieve the benefits of scale and efficiency. 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. Even as they share some resources, the three companies vowed to retain their independence and compete against each other with separate sales teams. For that reason, they said they don't expect U.S. antitrust regulators to object to the nonexclusive partnership before they begin selling ads together in January. By tapping into each other's technology, Microsoft, Yahoo, and AOL are betting they can save money and sell more advertising. The partnership will cover a category of advertising that doesn't typically appear in the prime slots on websites. Microsoft, Yahoo and AOL believe that space will be in higher demand if they can succeed at creating a more efficient, transparent market that helps connect advertisers with the Web audiences best suited for their marketing campaigns.

Google's share of the display advertising market has increased to 9 % this year from 2 % in 2008. During that same period, Yahoo saw its share decline to 13 % from 18 %, Microsoft has 5 % and AOL has a 4% stake. AOL, Microsoft and Yahoo are forecast to lose their share of online display advertising, with Facebook expected to surpass Yahoo for the first time this year. 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. Microsoft may eventually benefit from Facebook's success. It bought a 1.6 percent stake in Facebook for $240 million in 2007, and by some estimates, Facebook is now worth three to five times more than it was when Microsoft made its investment. Microsoft's online division has piled up operating losses of $7 billion since June 2008, having fallen behind in Internet advertising. Revenue at both Yahoo and AOL is steadily falling. Yahoo has been struggling so much that its board is mulling whether to sell all or part of the company.

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