Microsoft and AOL have been around for several decades, and joining forces seems like a brilliant move - especially in the face of such advertising giants as Google and Facebook. Some remaining employees will be offered other jobs at Microsoft, said a person with knowledge of the matter, who asked not to be identified because specific details of the deal haven’t been announced.
The deal with AOL marks the end of a years-long, multibillion-dollar effort by Microsoft to profit from the display advertising market with its own unit. Microsoft’s market share looks even bleaker when eMarketer is reporting the global display ad market grew 22.4% a year ago while Microsoft’s revenue dropped 15.5%.
But instead of Microsoft retreating from online ad sales, the setup suggests it has settled on a strategy that can extract more money from its ads within its own limitations and without spending millions on acquisition.
“Having said that, it’s a smart move from Microsoft as the company will benefit from a boost in search volumes by becoming the default across all AOL properties - something that can only contribute positively to the business”, Woolley said.
Earlier today, Microsoft announced the sale of some its mapping technology to Uber, which includes the transfer of 100 of its employees to the global ride service. Microsoft unveiled a plan a year ago to eliminate as many 18,000 jobs, the largest round of cuts in its history as Mr. Nadella overhauls the software maker. Perhaps, the timing of the deal is a subset of events related to Microsoft’s recent Yahoo negotiations. After the $6.2 billion dollar aQuantive write down in 2012, analysts and investors were asking for Microsoft’s resignation from advertisement.
But Microsoft, which is based in Redmond, Washington, will let AOL take over the selling of other types of advertising on Microsoft websites and apps, including MSN, Skype and Xbox. “Also, the fact that AOL will be entirely responsible for digital ad sales means a restructuring of Microsoft’s business - and this will affect how agencies and brands position budgets in future”. All of Microsoft Advertising’s 1,200 employees will receive offers to join AOL as part of the 10-year partnership.
With effect from January 2016, AOL will change its default search engine to Bing. His programmatic advertising technology startup, which automates buying and selling of ads online, will oversee sales in Austria, Belgium, Denmark, Finland, Ireland, the Netherlands, Norway, Portugal, Sweden and Switzerland.
As AdExchanger notes, AOL CEO Tim Armstrong has instructed a number of layoffs in his time at the company. The two companies confirmed the announcement to TechCrunch, though did not reveal the terms and conditions of the new deal.
By focusing on self-service Bing ads, it makes the search engine far more competitive with Google, which has seen its share of desktop search whittled down to 60 per cent in the USA.
