AOL, Microsoft, and Yahoo Kick Off Display Ad Deal

The ménage à trois in display advertising among Yahoo, Microsoft, and AOL has started on schedule. The three companies said today they are officially offering one another’s unsold inventory.

As a result, all three sales forces now have access to a trough of Interactive Advertising Bureau standard ad space bigger than any offered in one place before. But more important than reach and volume is quality, as the deal’s architects pray media buyers will view the new marketplace as the first stop for brand campaigns concerned above all with locking in “premium” media.

Yahoo and AOL’s ads will be served on the Right Media Exchange, while Microsoft will use its own branded exchange, which is built on the AppNexus platform.

The agreement, announced in November 2011, spans not only the portals’ branded sites but also network partners. It lets the three companies do what ad networks have been doing for years – resell each other’s media. The main difference is a matter of scale and complexity. AOL, Microsoft, and Yahoo together represent a greater variety of inventory types than is available through smaller ad network companies.

One risk is that the arrangement could remove the differentiating audience characteristics of the companies’ three ad network products: Yahoo’s Network Plus, AOL’s Advertising.com, and the Microsoft Media Network. Those networks will still offer unique data and other capabilities.

Another interesting question is how intensely these three ad sellers will compete to be the point of contact for agencies. In a blog post today, Yahoo advises its media buyers interested in accessing inventory on Microsoft and AOL to “please contact your Yahoo account executive or account manager.”

“I want to thank Yahoo and AOL for their partnership on this agreement, which took a concerted effort from all parties,” Daniel Scheinberg, senior director, display marketplaces at Microsoft Advertising, wrote in a blog post. Four months ago, the trio announced the partnership would take effect in the first quarter of 2012.

Correction: An earlier version incorrectly stated AOL is offering its inventory on Microsoft’s ad exchange. In fact it will use Right Media.