Microsoft, Yahoo and AOL are joining forces in an online advertising attack on Google and Facebook.
The alliance, announced on Tuesday, is designed to sell some of the less-prized ad space that Microsoft Corp, Yahoo Inc and AOL Inc have had trouble filling on their own.
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 US antitrust regulators to object to the nonexclusive partnership -before they begin selling ads together in January.
Yahoo executive vice president Ross Levinsohn hailed the alliance as a “fundamental rethinking” of the Internet ad market.
That statement also could be interpreted as a bit of wishful thinking. Having already built a moneymaking machine in its dominant search engine, Google has become even more powerful in Internet marketing since it bought DoubleClick’s ad service for US$3.2 billion 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.
Facebook has also attracts more advertising as it has established itself as the most popular hangout on the Internet. The company accumulates valuable insights into people’s interests as its 800 million users share their passions. That advantage has helped Facebook become the leader in US display advertising with a 16 percent share of the online ad market, according to research firm eMarketer Inc.
Yahoo, the former leader, has seen its share fall from 18 percent in 2008 to 13 percent this year. Google’s share of the display market moved from 2 percent in 2008 to 9 percent. Microsoft stands at 5 percent and AOL is hovering at about 4 percent, eMarketer said.
However, Microsoft could eventually benefit from Facebook’s success. It bought a 1.6 percent stake in Facebook for US$240 million in 2007. By some estimates, Facebook is now worth three to five times more than it was when Microsoft made its investment.
By tapping into each other’s technology, Yahoo, and AOL are betting they can save money and sell more advertising.
The partnership will cover a category of advertising that does not typically appear in the prime slots on Web sites. Microsoft, Yahoo and AOL believe that space will be in higher demand if they can create a more efficient, transparent market that helps connect advertisers with the Web audience best suited for their marketing campaigns.
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