Microsoft & AOL Enter Significant New Deal

Microsoft and AOL have just completed the finishing touches on a significant new deal that will have AOL searches powered by Bing (up till now they were powered by Google).  In addition, the ad inventory on Microsoft properties such as Outlook, Skype, x-box, MSN and more will be sold through AOL rather than through Microsoft directly.

Silicon valley word cloud concept
Silicon valley word cloud concept

Different parts of the deal will be put in place between now and January of 2016, with some of the most significant changes coming in the next few weeks.  The deal is set to last ten years, and future changes agreed upon by both companies can extend that out further.

This deal will remind many of the deal between Yahoo and Microsoft, which had Microsoft powering the Yahoo search results.  While that arrangement has been bumpy, it seems to have benefitted both companies overall.

AOL Search Results

The part of the agreement that is likely to get the most attention is the fact that AOL search will now be powered by Bing.  AOL has long used Google, so this change will take the AOL market share away from Google and give it directly to Bing.  While AOL really only has 1% of the US search market, this is still important.  Removing one percent from Google and giving it to Bing will look like a 2% swing on the stats.

Google has not commented on the move yet.  They aren’t likely to since this really is a small loss for them overall, but a loss none the less.  For Microsoft, however, it can be seen as fairly important.  They only recently passed the 20% mark for total share of the US search market, so this will take them a little bit closer to reaching the 25% mark, which will be a major milestone for them.

Display Ads

While it won’t get the same amount of press, this is actually likely to be a more important part of the deal.  Having AOL sell the ad space for Microsoft is going to be quite a change for marketers as well as Microsoft and AOL.  AOL already has an effective team in place since they own many popular web properties, so they may be able to use this to drive additional ad buyers to not only the Microsoft properties but also their own.

The deal is effective for Google’s top nine global markets including US, UK, Canada, France, Brazil, Germany, Italy, Spain and Japan.  In addition, Microsoft will begin using AppNexus to programmatically sell display inventory in other smaller markets including Austria, Belgium, Denmark, Finland, Ireland, the Netherlands, Norway, Portugal, Sweden and Switzerland.

The Microsoft display ad team won’t be losing their jobs, fortunately.  Many of them will, however, have to begin working for AOL rather than Microsoft.  The specific number is not known yet, but most people say it will be between 500 and 1200 employees.

These changes are small overall, but are likely the first of many between Microsoft and AOL.  These two companies are in good positions to partner up to improve things like search, ad inventory and much more.  Marketers will be wise to keep a close eye on how Microsoft and AOL’s relationship evolves.

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