Yahoo, AOL and Microsoft Strike Ad Deal

Yahoo Inc. (NASDAQ:YHOO), AOL Inc. (NYSE:AOL), and Microsoft Corp. (NASDAQ:MSFT) have agreed to for an advertising partnership that will help the three companies compete with Google and Facebook in the fast growing online advertisement space.

The partnership was announced by the three companies on Tuesday in a joint statement. This alliance will allow the three companies to sell their and each other’s online advertisement space. The partnership will begin to play early next year and advertisers will be able to reach the websites of the three companies by approaching any one of the three.

Display advertisement is said to grow at a rapid pace. These advertisements appear on websites and are a very attractive way for advertisers to display their products or services. These advertisements are quite expensive and help run websites. Google (NASDAQ:GOOG) and Facebook currently have a strong presence in this area, with Google leading the market.

Microsoft’s vice president of the Advertising Business unit, Rik van der Kooi said that the partnership will help the three companies perform better and call the partnership as a “rising boat that will raise all boats”.

The partnership is attractive to the three companies, since it broadens the reach of each company and their advertisers, who are looking for premium inventory. The three companies will have a signinficant control over their rates and other sections. They will actively be competing against each other to form partnerships with publishers and also to attract advertiser spending. They will also be allowed to maintain the cost controls of their own display spaces.

The deal is still not complete, as it is set to gain approval from the Department of Justice. The three companies are certain that the deal will gain approval. The DoJ could disapprove the partnership on the grounds that this could lead to diminishing competition and could also lead to increasing the price of online advertisements. If it gains approval, the tree companies will start selling each other’s ad space in 2012, after integrating their real-time bidding systems.

The partnership is aimed to increase overall sales and also their margins by making the process of selling and buying display advertisement space much simpler and also more convenient for publishers and marketers. The partnership is not in any way aimed to decrease competition, according to Kooi. He said that the increased transparency will only lead to increasing the competition.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.