To counter the growing dominance of Google and Facebook in display advertising, Yahoo, Microsoft and AOL have announced agreements to offer each others premium non-reserved online display advertising inventory to their advertising customers. The deal will cover Yahoo! Network Plus, AOL’s Advertising.com and the Microsoft Media Network, and look to offer advertisers more reach and scale in display advertising. What we can’t be too sure of is if this means that publishers will get a better deal than before because while this indicates a larger advertiser reach, it also means that more inventory is being pooled. How this will impact CPM (cost per thousand ad impressions) advertising rates is anybody’s guess.

What’s being done:
– Timeline: the deal should be operational by early 2012
– United States mostly: the partnership covers the United States, but Yahoo and AOL will have an agreement that extends to Canada. Microsoft’s Canada business is not participating directly in the agreement.
– Pooling inventory: They’re integrating one anothers real-time bidding (RTB) technologies to facilitate the availability of nonreserved inventory. The Microsoft Advertising Exchange and Yahoo’s! Right Media Exchange will initially serve as the two marketplaces from which the partners can procure this inventory for resale to advertisers and agencies. AOL may, at its discretion, opt to use its own exchange technology solution subsequent to the launch of the partnership.
– Non exclusive deal: each company will continue to make its own decisions, differentiate its offerings and set its own controls for how it operates any exchanges, ad networks or other aspects of its display businesses. They will actively compete with each other for both advertiser spend and publisher partners based on their own unique product differentiators.

Why This Is Interesting

We see this as a sign of things to come – given how aggressive Google has been, and how Facebook appears to be attracting even display advertising, advertiser spends are already being pulled away. With time, individual portals (no portal-specific ad networks in India) will find that they don’t have as much scale to offer to agencies and advertisers, as compared with a Google or Facebook.

Question is, will Indian portals be driven by business considerations or by ego? Can you imagine Rediff, Yahoo and Indiatimes combining inventory in India? My take is that initially it will be about ego, but then some inventory will make its way to ad networks. Eventually, portals might want to combine inventory rather than go with a network.

*Our advertising coverage is brought to you by Indiatimes.