AOL and Google Make Terms Public

Time Warner’s America Online is publicly declaring that Google is its suitor of choice. After months of speculation and a frenzy of reports, the companies announced a number of advertising-related integrations and a $1 billion investment by Google in AOL.

“We’re confident that this partnership marks the next big step in making AOL an even more important player in online advertising,” said Don Logan, chairman of Time Warner’s Media & Communications Group, in a statement.

The deal expands upon an alliance first struck in May of 2002, when Google beat out Overture (now Yahoo Search Marketing) to display its paid search ads on America Online. Later, AOL and Google expanded their relationship to encompass Europe and Canada. This latest alliance, forged after Microsoft’s MSN reportedly tried to woo away the Time Warner property, is unprecedented, however.

Most surprising, perhaps, is the exposure Google will afford AOL properties on search results pages. Though Google says details are still being worked out, the companies have discussed including small graphics, such as a logo, as part of paid search listings. AOL painted a scenario in which the graphic and links would appear below the sponsored listings, clearly labeled as advertising.

“If you type in ‘Madonna,’ for example, below the sponsored links, you’d get a picture of Madonna and ‘content from Madonna’ sponsored links,” explained Tricia Primrose-Wallace, a spokesperson for AOL.

It’s the first time Google has featured graphic advertising on its flagship search property.

Google will also highlight AOL content on its Google Video site, allowing the Time Warner property to promote its 18,000 licensed and original video clips. Other AOL content will likely get better exposure on Google because the search giant has agreed to help the portal optimize its Web pages for search. AOL also gets marketing credits on Google’s network that it can use to drive traffic to its Web properties via paid search and contextual ads.

The deal also calls for Google to white-label its paid search advertising technology — the first time it’s ever done so — to allow AOL Media Networks to sell the ads directly on the AOL network. In the past, search marketers have said AOL drove greater return-on-investment than other sites in the Google distribution network, but previously there was no way to buy its search inventory separately. The new arrangement would also allow AOL salespeople to package search placements along with traditional Web media.

Additionally, AOL’s sales force will be able to sell display ads that appear on Google’s AdSense contextual ad network. Google currently accepts animated .GIFS from advertisers who place CPM-based, site-targeted ads, and AOL would be able to offer the same creative and targeting.

“It will enable AOL’s sales force to offer a very comprehensive suite of products to advertisers — including paid search, which is huge — and all forms of display ads,” Primrose-Wallace told ClickZ News.

Primrose-Wallace notes that AOL Media Networks will now be able to sell AOL search and display ad inventory along with third-party inventory via and the Google AdSense network.

The deal calls for AOL and Google to extend their existing advertising distribution relationship in Europe, but they are considering expanding the white-label agreement internationally. The agreement could eventually also be extended to Time Warner’s other properties, such as the Web presences of its offline media entities.

AOL and Google have also agreed to enable their instant messaging clients, AIM and Google Talk, to interoperate, if certain non-specified conditions are met. The companies didn’t elaborate.

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