Microsoft, Yahoo! and AOL are joining forces in an online advertising attack on Google and Facebook. The alliance, announced this week, is designed to sell some of the less-prized ad space that the three 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 U.S. antitrust regulators to object to the non-exclusive partnership before they begin selling ads together in January.
Ross Levinsohn, a Yahoo! executive vice president, hailed the alliance as a ‘fundamental rethinking’ of the Internet ad market. That statement also could be interpreted as a bit of wishful thinking.
Microsoft, Yahoo! and AOL all need to change the direction of an online ad market that has been increasingly tilting in the direction of Google and Facebook.
Facebook attracted more advertising as it became established as the Internet’s most popular hangout.
The company accumulates valuable insights into people’s interests as its 800million users share their passions.
That advantage has helped Facebook become the leader in U.S. display advertising, with a 16 per cent share of the online ad market, according to the research firm eMarketer Inc.
Yahoo!, the former leader, has seen its share fall from 18 per cent in 2008 to 13 per cent this year.
Google’s share of the display market moved from two per cent in 2008 to nine per cent.
Microsoft stands at five per cent and AOL is hovering around 4 per cent, according to eMarketer.
As it has fallen further behind in Internet advertising, Microsoft’s online division has piled up operating losses of more than £4billion since June 2008.
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.
Microsoft may eventually benefit from Facebook’s success. It bought a 1.6 per cent stake in Facebook for £200million 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 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.
{The Daily Mail/Matzav.com Newscenter}
