Yahoo, AOL, Microsoft Forge Partnership in Bid to Raise Online Ad Revenues

Three Legacy Portals Create Marketplace For 'Premium' Ad Inventory

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Meet the newest ad exchange on the block. Aging portals AOL, Yahoo and Microsoft officially announced a long-rumored partnership today to pool their non-reserved display inventory in an effort to gain a bigger share of display ad dollars increasingly going to Facebook and Google.

Yahoo EVP-Americas Ross Levinsohn said the agreement "will help revolutionize the buying and selling of premium online ad inventory."

Starting in early 2012, the three companies say they will integrate their real-time bidding technologies to provide buyers access to scaled, premium inventory in one spot.

Though the partnership had been rumored for a while, some parties had been surprised by AOL's willingness to participate and open up its inventory to competitors' platforms after historically being unwilling to do so. But is the largest buyer of Yahoo inventory, according to Kurt Unkel, SVP, director at Vivaki Nerve Center, and he said it's quite possible that Yahoo would have turned off access to that inventory had AOL not participated.

"I think AOL was at the table simply because maybe that possibility was thrown on the table at the start," he said earlier this week.

AOL Chief Revenue Officer Ned Brody said that fear of losing preexisting access to inventory did not play a part in the decision to join up with the other two companies.

Mr. Brody said the hope is that the partnership will allow AOL to better scale its rich-media Devil ad units, which AOL is working to have adopted outside of its own media properties.

Quentin George, chief innovation officer for IPG Mediabrands, said this announcement is a good first step toward simplifying the buying of premium inventory.

"All of the holding companies have been very explicit in articulating how favorable it would be for us to have persistent access to that quality and scale of inventory," he said. "It just offers a really compelling level of concentration of quality inventory that just removes a lot of friction in the system."

Still, he said, all publishers need to do a better job of delineating between what inventory is sold directly, and which is sold on an auction basis through exchanges. "We still need to understand what inventory gets dynamically provisioned and what gets sold face to face."

"At the end of day, they need to be able to have more a sophisticated answer to what gets sold through which mechanism," he added. "Because in the past, the adage was simply that the more premium the content is , the more face-to-face it needs to get sold. I don't think that maxim holds true any more. "

Initially, the inventory can be procured through Microsoft's Advertising Exchange and Yahoo's Right Media Exchange, the companies said.

David Cohen, EVP, global digital officer at UM, said he thinks the agreement will result in consolidation of the partnership into a single platform in the future.

"I have to imagine that over time it will migrate to a single platform," he wrote in an email. "Marketers are looking for clean, well-lit environments that can scale. Would more publishers be good, sure, but the big three have tremendous scale when aggregated (especially as they turn off their inventory going to outside ad networks) and the partnership represents a very material opportunity right out of the gate."

The companies said that the partnership focuses exclusively on audience-based selling and should not affect direct sales by any of the companies' sales teams.

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