Microsoft, AOL and Yahoo Partner To Fight Facebook and Google in the Advertising Business

This week, AOL, Microsoft and Yahoo! announced their plans to seal off extra online space for ads on each other’s websites. It’s a strategy to slow down Google and Facebook’s ever growing momentum in ads display. This somehow bizarre alliance 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.

Around a couple of months ago, the plan was revealed by All Things D’s Peter Kafka. The companies said in their statement that the partnership should enhance the demand for and value of each party’s display advertising offerings as well as provide better yield for both participating publishers and advertisers.

Google has been taking an increasing share of the lucrative and growing display advertising market, according to research firm eMarketer, and Yahoo!, Microsoft and AOL have all lost shares.

Google makes most of its money from advertising tied to Internet search, but has been gaining a larger share of the revenue from online display advertising which includes rich media, digital video and banners ads. Also, according to the same study, in June, 2011, Facebook is expected to overtake Yahoo! as the No. 1 provider of display advertising in the United States; while Google is estimated to be second-fastest growing ad-seller.

When asked about the possible participation of Google and Facebook, Microsoft’s Rik van der Kooi said that they are already opening it up for other publishers with high-quality inventory and thus other names in the industry “are welcome to join”.

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