Yahoo, Microsoft, and AOL Confirm Mega Display Ad Deal

An unprecedented ad network agreement between three of the largest display ad sellers has been made official. Yahoo, AOL, and Microsoft today confirmed plans to pool together their unsold inventory in a deal that aims to increase their margins, secure higher prices for remnant ads, and augment the reach available to agencies and advertisers.

At its core, the deal is not so different from what ad networks have been doing for years, which is resell each others’ inventory. By early next year, the companies aim to inegrate one another’s real-time bidding platforms to facilitate the availability of non-reserved inventory, creating much larger scale and efficiency for their sales organizations. The joint platforms underlying the ad integration will be the Microsoft Advertising Exchange, built on AppNexus, and Yahoo’s! Right Media Exchange. Each company will set its own controls for how it operates within the real-time bidding environment.

Yet while the deal resembles a traditional ad network agreement in some ways, in other respects it’s a different beast entirely.

For one, the three digital media giants together represent a much greater variety of inventory than is available through smaller ad network companies. Operational headaches are bound to arise as three large digital media companies seek to integrate their ad formats, standards, reporting, and operations.

Other devils may arise in the details, for instance the issue of data ownership. User data safeguards will likely be necessary to secure the value each company can claim from its own inventory.

A third danger is that the integration 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.

Yet the trio has clearly evaluated these challenges, deciding the potential benefits outweigh the risks.

Ross Levinsohn, Yahoo’s EVP of the Americas, who has been cited as chief architect of the arrangement, said in a statement, “We’re thrilled to partner with Microsoft and AOL and bring to market what we believe will be a more efficient, effective and more effortless way to access true premium inventory and formats. There has a been a significant shift in how inventory is bought and sold, and we’re now 100% focused on controlling our own destiny, working directly with marketers and agencies and driving better returns for our advertising partners.”

Outside the U.S., Yahoo and AOL will extend the deal to Canada. Microsoft Canada will not take part.