Microsoft, Yahoo! and AOL Collaborate For Online Ad Deal – To Compete With Google, Facebook

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Recognizing how powerful Google (Adsense) and Facebook have become as Internet money making machines, Microsoft, Yahoo! and AOL are joining forces to sell online advertising. This alliance was announced on Tuesday, 8th November, 2011 and the three tech giants said they would pool their resources to sell leftover ad space beginning January, 2012.

All the 3 companies have vowed to retain their independence and compete against each other with separate sales teams to avoid the appearance they are forgoing their independence and avoid drawing scrutiny from antitrust regulators. They have decided to come together to slow down momentum of Facebook, which has become attractive to advertisers as the world’s most popular online hangout because it has 800 million users. Research firm EMarketer says Facebook is already the leader in U.S. display advertising with a 16% share of the online ad market.

This advertising alliance gives the three companies the right to sell each other’s excess ad space. The partners said the deal was not exclusive and would be open to other publishers. By tapping into each other’s technology, Microsoft, Yahoo!, and AOL are betting they can save money and sell more advertising.

Google Inc. has become even more powerful in Internet marketing since it bought DoubleClick’s ad service for $3.2 billion back in 2008. That deal provided Google with a springboard to leap from text ads that appear next to search results into the graphical messages known as display advertising (Or more popularly as Adsense).

The value of ads on AOL, Microsoft and Yahoo! have slipped with rising competition from Google and FacebookYahoo! has been struggling so much that its board is mulling whether to sell all or part of the company. Microsoft’s online division has also piled up operating losses of $7 billion since June 2008. Although Microsoft may eventually benefit from Facebook’s success since it bought a 1.6 % stake in Facebook for a whopping $240 million in 2007. By some estimates, Facebook is now worth three to five times more than it was when Microsoft made its investment, so Microsoft has certainly a golden egg at their disposal 😉

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