In a deal announced today, AOL will take over display ad sales for Microsoft, which includes mobile and video ads, in nine major countries. Microsoft will continue to maintain Bing and its associated search ads business. As part of today’s news, Microsoft has signed a 10-year deal for AOL to be powered by Bing, ousting Google from that role, as of January 2016.
Display Ads
Microsoft will continue to have display ads, including mobile and video ads, on various properties ranging from MSN to Outlook to Xbox and Skype. However, it will no longer sell those ads directly. Instead, AOL will handle these Microsoft’s nine largest global markets: the US, the UK, Canada, Brazil, France, Germany, Italy, Spain and Japan.
Beyond those countries, will use AppNexus to programmatically sell its display inventory in the markets of Austria, Belgium, Denmark, Finland, Ireland, the Netherlands, Norway, Portugal, Sweden and Switzerland.
The change to AOL and AppNexus will happen in the coming weeks and months. Microsoft said that no employees are losing their job in relation to the biggest countries its serves. The company wouldn’t say how many jobs are in flux (one report says 500; another 1,200) but admitted it’s a significant number and stressed again that everyone would get offers to keep working with AOL.
“It’s a large number. Again, the key point we want to make, all of those people for those nine markets are being given jobs,” Rik van der Kooi, the vice president who heads Microsoft’s ad business, told me when we talked today.
He also stressed that Microsoft isn’t giving up display, just display sales.
“We are committed to advertising as a business model, including display advertising. But we want to focus on building great content and communication services and monetize them by advertising,” van der Kooi said.
Search Ads
Microsoft is retaining its search engine, Bing, as well as the search ads platform built around it, Bing Ads. In a new deal, AOL will drop using Google’s search results and ads in place of Bing’s, as of January 1, 2016.
The AOL deal is no great loss for Google, which wouldn’t comment about the change. In the US, AOL has about 1% share of the search market, which is like a rounding error to Google’s 65% share. There’s even an argument that losing AOL strengthens Google against charges it’s too dominant at search. It can point at this loss as an example of “see, we don’t always win.”
It’s still a significant gain for Bing, which recently passed the 20% marketshare mark in the US. This helps nudge it a bit higher. Microsoft also revealed that Bing is successful as a standalone product. See our companion story for more on that: Search Beats Display: Microsoft Says Bing Is A Sustainable & Standalone Multibillion Dollar Business.
The deal lasts for 10 years, and Microsoft shares more about it here. Terms of the search and ad deals were not disclosed. “What’s good for AOL is good for us,” is all van der Kooi would say.
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