Microsoft, AOL, and Yahoo to Cooperate on Display Ad Sales

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Yahoo, AOL, and Microsoft have formed an alliance to cooperate on display ad sales, ClickZ has confirmed. Under the arrangement, which was formalized in the last week, each company's sales force will have the ability to dip into its rivals' unsold inventory - selling ads on each other's sites. If implemented, it should help the companies fill advertiser demand and reduce their reliance on remnant sales channels such as ad networks and exchanges, which command much lower prices.

But important questions remain, including how the trio of frenemies will be stopped from pillaging one another's ad data once their sales and trafficking systems are integrated. Also unclear is which ad management platform will be used to centrally manage media transactions.

Microsoft, Yahoo, and AOL will need to settle on a centralized management interface that its sales forces can use to quickly manage ad bids and make ad decisions. Who will own and operate this middleware remains to be seen. One likely candidate is AppNexus, a real-time bidding platform in which Microsoft holds a large stake.

Many of the trio's agency and publisher partners learned about the deal last night during a meeting that took place in New York City. Details of that meeting were first reported by AllThingsD.

But talks have been underway for many months, according to a source at one of Microsoft's publisher partners.

"If it gets us higher CPMs, I'm all for it," said the source, who was only asked to sign off on the alliance in the last week. "Our main concern is that we keep the quality bar up and stay away from long tail networks as much as possible."