Friday, January 4, 2013

Microsoft, Yahoo, AOL Partner on Advertising

In a bid to counter some of the Internet's larger ad giants--most notably Google and Facebook--Microsoft has joined in an advertising partnership with AOL and Yahoo.

However, Microsoft isn't framing the agreement as a response to its competitors in that arena. "Other players in the industry are welcome to join us," Rik van der Kooi, corporate vice president of Microsoft Advertising Business Group, told Reuters Nov. 8. "This is not in response to anybody in particular."

Under the terms of the agreement, each of the three companies can sell premium display ads belonging to the other two. That will allow the trifecta to more efficiently unload premium advertising inventory, although their competition over advertiser spending and other segments will continue apace.

Facebook and Google continue to battle for their own significant shares of the online advertising pie. Although Microsoft's product portfolio gives it diverse streams of revenue (in contrast to Google, for example, which depends on advertising for an overwhelming percentage of its bottom line), its recent emphasis on Web and cloud services makes advertising a more prominent concern. Greater ad revenues would also allow Microsoft to absorb some of the massive losses its online division accrues on a quarterly basis.

Microsoft is already in partnership with Facebook. A number of the latter's features, including the "Like" button, feed social data into Bing, Microsoft's search engine. That wouldn't stop Microsoft from making a more aggressive play for the same advertising-dollar pool that feeds Facebook, of course, and nor would that stop AOL or Yahoo, which presumably view Facebook as more of an existential threat.

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