Online giants strike ad deal

10 November 2011

NEW YORK: Microsoft, Yahoo and AOL have announced a new partnership deal that will allow each of the three firms to serve banner ads to the others' unsold inventory.

Announcing the agreement, the parties indicated that the partnership covered premium display ads only and would be open to other companies.

It is hoped that the historic deal will improve efficiencies and boost online ad CPMs across websites owned by the three firms.

Fierce competition has served to depress banner ad prices over recent years.

Facebook has launched a variety of initiatives to improve its position in the display ad space, while Google is also looking to extend its dominance of text-only search ads to other types of online spots.

Figures from eMarketer released in July suggested that Facebook would overtake Yahoo to become the largest display ad-selling company in the US in 2011, taking a market share of 17.7%, a rise of 5.5 percentage points from 2010.

Over the same period, Yahoo was forecast to drop from a share of 14.4% to one of 13.1%. Meanwhile, Google was expected to improve its position from 8.6% to 9.3%, with Microsoft and AOL, in fourth and fifth place, both forecast to lose share.

Revenues for the US display ad market as a whole were anticipated to rise from $9.9bn to $12.3bn.

Speaking to the Financial Times, Ross Levinsohn, Yahoo's EVP for the Americas, said that the three firms "hope to drive the CPM up for all of us" with the deal.

"[We have] done a remarkable job creating premium media. A lot of publishers out there are facing the challenges we are."

Meanwhile, Rik van der Kooi, corporate vice president of the Microsoft Advertising, moved to allay fears that the US authorities would frown on the deal.

"We're not reducing competition in any way, shape or form," he said. "As a result of transparency, the competition is only going to increase."

Data sourced from Financial Times/Reuters; additional content by Warc staff