Last week, Microsoft and AOL concluded a deal that sees the Microsoft ad sales business move over to be managed by AOL, with AOL now switching its preferred search partner from Google to Bing. Within the digital industry, the move is being viewed as a particularly smart post-Verizon acquisition for AOL, although I would caution as to whether this will make any real dent in Google’s dominance in search, given that its market share is so vast. Regardless, Microsoft and AOL clearly stand to benefit from this. It's also interesting to think about the upshot for brands and agencies -- and what this says about the industry as a whole.
Although this kind of deal is not uncommon -- they were formerly called "prospect pools" -- it’s a sign of the times and the increased impact of programmatic on the industry. The IAB has just revealed figures that show that programmatic ad spend in the UK has almost reached the GBP1bn mark (45%), with it set to grow to take 80% of the digital advertising market by 2018.
If we look at the advantage for the two parties directly involved first, for AOL it means greater reach and a larger set of data points. It will give the company more information on users, and a greater volume of data for more robust targeting. There are privacy issues to negate here when it comes to bringing Microsoft data together with that of AOL, and parent company Verizon, but once this is in place the offering to the market will be significant. From a Microsoft perspective, we are seeing the company moving to focus on what it is good at. Maps has been sold off and the ad unit has moved over to AOL, which suggests the company is both stripping out its loss-making business and relocating it in order for it to perform to its full potential. This is not a move out of the ad space entirely, but a focus on search as a space in which Microsoft can grow its business.
For the market this means brands and agencies will have access to a combination of all inventory sources across MSN, Xbox and Skype, to name a few. It’s will place a lot of opportunity in one place with AOL’s .ONE platform, ensuring that advertisers will have more flexibility when it comes to planning and executing campaigns holistically across Microsoft properties. This will be backed up by a vast data set ensuring that the main benefit will be the opportunity to achieve personalisation across multiple channels, something all brands are in competition to deliver.
Both the Microsoft and AOL brand are well-respected, ensuring that brands will feel they are in a good place and in good hands -- so I would imagine that this will be an attractive proposition to advertisers. This is important because we’re all working within an increasingly competitive market, battling against great levels of noise across all channels. The reality is that partnerships are the way forward because you can’t always be the smartest people in the room, and can’t be everything to all people. In this context AOL and Microsoft coming together to bolster each other’s offerings seems to be a smart way to make the most of the opportunity on offer.