Bold alliance or shortsighted, quick fix -- analysts on Wednesday couldn't decide which better describes a rumored plan by AOL, Yahoo, and Microsoft to share remnant ad inventory.
"On a
certain level, it seems like a bold move, because of the effort it would require to execute," said Joanna O'Connell, senior analyst at Forrester Research. "They obviously need to do something to stop
losing market share, but [Yahoo, AOL, and Microsoft] are very different companies, which is going to make any deal difficult."
"On the other hand, it feels like a short-term, shortsighted answer
as the industry becomes more automated," O'Connell added. "I just don't want to see [AOL, Yahoo, and Microsoft] give up on automated buying -- but I don't think that's going to happen."
According
to a report in All Things Digital, the three would-be partners made their pitch to top publishers and ad buyers during a private dinner on Tuesday night.
AOL, Yahoo, and Microsoft issued
statements on Wednesday acknowledging the likelihood of "future" collaborations. However, spokespersons from the three companies declined to offer additional details on Wednesday.
Per the
supposed deal, Microsoft, Yahoo and AOL would sell each other's "Class 2 display" inventory -- i.e., graphic ads that the companies can't sell on their own, which would otherwise be left to ad
networks.
Relatively new to the display ad business, Google has not wasted any time displacing one-time market leaders. According to a recent IDC report, Google overtook Yahoo in terms of display
ad revenue share for the first time in the first quarter of the year.
Facebook's share of U.S. online display ad dollars is expected to reach an enviable 17.7% this year -- up from a 12.2% in
2010, according to eMarketer.
Citing comments from guests of Tuesday night's dinner, All Things D reported that the partnership is slated to begin by the end of the year, but will not
require exclusivity. Each company is free to work with any ad network.
Perhaps greasing the wheels of any additional deal, Yahoo and Microsoft have an existing partnership, which encompasses
online search and advertising.
Meanwhile, Yahoo in May spent $28 million to buy ad platform 5to1 -- which works with some 20 top publishers, although it has not named them.
Launched by
former Fox Interactive execs Ross Levinsohn, Jim Heckman and Michael Barrett in late 2009, 5to1 was designed to help publishers remove unwanted ads from their sites by offering them a system to "shop"
for ads from an iTunes-like online store.