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AOL/Microsoft/Yahoo ad deal: 'The devil is in the details'

Juan Carlos Perez | Nov. 15, 2011
The partnership AOL, Yahoo and Microsoft announced last week to sell each other's "tier 2" display ad inventory could yield great benefits, but they need to pull off a complex integration of business and technology to make it work.

The initiative sounds good to Nick Beil, an executive from VivaKi, a global buyer of ad space for large marketers. "We're very supportive of the fact that this is about bringing better-quality inventory into a dynamic marketplace where we can buy it through a technology platform in an automated way," he said.

As president of VivaKi's Nerve Center, the company's research and development arm, Beil intends to link his unit's automated display-ad-trading desk, Audience On Demand, with the combined platform from AOL, Yahoo and Microsoft.

Although the three companies have consulted VivaKi about the project, Beil cautioned that success isn't guaranteed and that he still hasn't heard all the details.

"A question is the level of transparency we'll get into the inventory, which is a priority for us," he said. "We need to make sure that this is indeed premium inventory, as they say it is."

Other issues include technical integration details for a tool like VivaKi's Audience On Demand to plug into the combined AOL/Yahoo/Microsoft marketplace, and where AOL will surface its inventory, which hasn't yet been announced, he said.

Ultimately, the most important factor for success will be how well the ads perform for marketers, and that won't become clear until a quarter or so after the project goes live, Beil said.

John Montgomery, North America chief operating officer of GroupM Interaction, another large buyer of online ads for marketer clients, calls the project "a big idea."

"Execution is vital with anything like this. It's got to work better than the current solutions in order for it to pull significant business," he said.

The initiative has the potential to be operationally complex, and AOL, Yahoo and Microsoft have to make sure they make this manageable, he said.

"In these things, the devil is always in the details and how it's executed. It needs to work really well from the beginning," Montgomery said. Microsoft, Yahoo and AOL have also consulted GroupM about their project.

For Rebecca Lieb, an Altimeter Group analyst, the value for media buyers isn't clear, because they have increasingly more and more options for acquiring this type of ad inventory from "myriad" ad exchanges.

"I'd like to see the value proposition to media buyers better explained. The benefit to the three portals is clear, but it's perhaps too one-sided once their customers are taken into consideration," she said via email.

If the alliance does release high-quality ad inventory into the marketplace, it could very well expand the practice of targeting specific audience segments, by attracting big brand marketers to it, Montgomery said.

"Brand marketers aren't taking advantage of programmable buying in scale because it's not perceived to be great inventory, nor safe," he said.


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