Friday, September 16, 2011

Can Yahoo-Bing-AOL Battle Google on Display Ads?

After Yahoo fired Carol Bartz, many wondered what the search engine firm would do next. Would Microsoft Relevant Products/Services make another bid for the beleaguered brand? Would AOL swoop in and snap up the search prince? Yes and, well, no.

Google probably never saw this one coming. If rumors hold true, AOL, Yahoo and Microsoft plan to join forces to sell ad inventory on one another's sites. The idea, of course, is to grab market share from the 800-pound gorilla named Google.

According to All Things D, execs from all three brands hooked up with top web publishers and ad buyers to spell out the competitive plan at a Manhattan dinner earlier this week. The goal: to convince everyone to play ball with the three Internet behemoths.

Display-Ad Battles

"The idea, according to people who attended the meeting: Microsoft, Yahoo and AOL have agreed to sell each other's 'Class 2 display' inventory -- graphic ads the companies can't sell on their own and would normally hand over to ad networks," Peter Kafka, author of the All Things D column, wrote.

"The theory is that if, say, AOL has a big order for a certain kind of ad impressions, it will fill it with its own inventory as well as with what's available from Microsoft and Yahoo."

It sounds like a promising plan, but so far AOL, Yahoo and Microsoft are mum on whether or not it's true. The companies have declined to comment on the reports that they are banding together to stop the bleeding from third-party ad network Relevant Products/Services opportunities on the display-ad front.

Material Impact?

Considering Google's longstanding dominance in the search market, a tag-team approach could be the only way to fight back against the company's efforts to creep into the display segment. Although the Bing and Yahoo search partnership has gained momentum -- mostly on the back of Bing -- Google nevertheless maintains about 76 percent of the search-engine market, according to eMarketer.

With the partnership, AOL, Bing and Yahoo would try to ward off Google's erosion of their display markets. Google already has about 9 percent of the market share in display, eMarketer reports, which totals about $1.1 billion in revenues. If Yahoo, AOL and Microsoft did team up, their combined revenue in the display space would total about $2.7 billion.

"I don't think it will have much impact. With Google's 76 percent, even combined this group is still a pretty insignificant player," said Zeus Kerravala, a vice president at the Yankee Group.

"If you put two guys with a broken leg together they aren't going to be able to walk as fast as someone else," Kerravala said. "That's kind of what we are looking at here. Google innovates much faster than those companies together on the search front, so I don't see it solving that problem either."
 

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