AOL, Microsoft, Yahoo join forces to take on Google’s ad business

By Andrew Couts September 14, 2011

In an attempt to beat back Google’s Goliath ad business, AOL, Microsoft and Yahoo have agreed to begin selling advertising inventory on each other’s websites, reports AllThingsD‘s Peter Kafka. The three companies have not yet commented on the ad “pact.”

The news follows a dinner meeting last in New York City between executives from AOL, Microsoft and Yahoo! during which the trio explained the new deal to a group of top online publishers and ad buyers. Their hope is that the publishers will agree to take their side in the battle for ad dollars, as well as convince major ad holding companies to buy ad space through the newly formed coalition.

As Kafka explains:

The idea, according to people who attended the meeting: Microsoft, Yahoo and AOL have agreed to sell each other’s “Class 2 display” inventory — graphic ads the companies can’t sell on their own and would normally hand over to ad networks.

The theory is that if, say, AOL has a big order for a certain kind of ad impressions, it will fill it with its own inventory as well as what’s available from Microsoft and Yahoo.

In such a scenario, where ads sold to one of the three companies appears on sites owned by the other two, all three will share the revenue generated by the ad buy — this, despite the fact that all three of them will continue to compete for ad dollars. Each company will reportedly choose their own strategy for conducting business under the new agreement, which is set to take effect by the end of this year.

The deal is more of a gentleman’s agreement to help one another help themselves than the kind of set-in-stone business deals one might expect, since any of the companies can work with other ad networks, even Google. Seeing as Google recently overtook Yahoo as the largest player in the display ad game, however, it’s no secret that taking business away from the Mountain View, California-based Internet giant.

[Image via EDHAR/Shutterstock]

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Yahoo takes #1 spot, knocks Google down to #2 in US Internet traffic

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You read that right – Yahoo received more U.S. Internet traffic than Google in July, according to the latest monthly report of the top 50 U.S. Web properties from comScore. Google has held the number one traffic spot for the past two years. The last time Yahoo found itself in the top position was May 2011.
By comScore's count, Yahoo received 196,564,000 visitors during the month of July. Google came in a close second, with 192,251,000 visitors. Microsoft Web properties, Facebook, and AOL sites all rounded out the top five.

Yahoo's boost in traffic numbers follows the company's $1.1 billion purchase of Tumblr in May. ComScore lists Tumblr.com sites, which reportedly have a combined total of 300 million users and 120,000 new sign-ups each day, as its own entry, coming in at number 28 on the list with 38,367,000 U.S. visitors in July. According to a footnote on the comScore report, "some portion" of Tumblr's traffic was assigned to "other syndicated entities" – presumably Yahoo. It is not entirely clear, however, what "some portion" means. But considering Tumblr is now part of the Yahoo network, we would guess that portion is around 100 percent.
The Tumblr acquisition is part of Yahoo CEO Marissa Mayer's efforts to revive Yahoo's brand, and return the company to its place as a top player in the Internet ecosystem. In a statement released in May, Mayer predicted that "Tumblr+Yahoo could grow Yahoo’s audience by 50 percent to more than a billion monthly visitors, and could grow traffic by approximately 20 percent." In fact, Yahoo's traffic for July 2013 is exactly 20 percent higher than its July 2012 traffic.
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Google and Yahoo are among the top ten largest contributors of advertising revenue to websites that facilitate online piracy, according to a report released Thursday by the University of Southern California's Annenberg Innovation Lab. A similar report will be released by the USC Lab each month.
Online and mobile advertising network Openx, which was backed by AOL Ventures, topped the report's list, while Google came in at number two. Yahoo, and its ad exchange Right Media, ranked sixth, followed by Quantcast, another major player in online analytics and advertising.
The report's rankings (PDF) were based off of the number of "top infringing sites" on which code from these ad networks were found.
While Google landed one of the highest profile spots on the Annenberg list, the search giant provided the researchers the components for their ammunition. Google's own Transparency Report, which lists the domains that have received the most Digital Millennium Copyright Act (DMCA) Takedown requests, filled out the report's top piracy website list. Further, the report was inspired by a study, "The Six Business Models of Copyright Infringement," funded by Google and PRS for Music on Brands, which found that peer-to-peer websites that feature illegally distributed content received 86 percent of their revenue from advertising.
Jonathan Talpin, director of the USC Annenberg Innovation Lab and a former film industry executive, does not hide his motivation for releasing the report.
"Large pirate sites distribute illegal content and continue to steal trademarked, copyrighted content and siphon millions of dollars away from the creative community, making it much harder for artists to make a living," said Talpin in a statement. "We do not believe that government regulation alone is the answer to the Piracy problem, but rather that the self-regulation of major sectors like the online advertising industry could make it harder for the 'Kim Dotcom’s' of the world to unfairly exploit artists. We look forward to working with advertising agencies and networks in the coming months to address this issue.”
According to the Los Angeles Times, the fight against online piracy is a personal one for Talpin, whose friend, musician Levon Helm, was forced to go back on tour to pay for throat cancer treatment after the rise of pirate sites like LimeWire and The Pirate Bay.
"All musicians know ... why their incomes have plummeted," Talpin told the L.A. Times. "Everyone knows piracy has destroyed the music business."
Despite Google's data being used in the Lab's report, the company says that it believes the researchers are a "mistaken" in their findings, and asserts that it has been a leader in the fight against online piracy. Long criticized by the Hollywood entertainment industry for its role in the online piracy ecosystem, the search giant announced last August that it would begin pushing websites accused of copyright infringement further down in its search results.
"We have not seen a copy of this report and don’t know the methodology, but to the extent it suggests that Google ads are a major source of funds for major pirate sites, we believe it is mistaken," a Google spokeswoman told Digital Trends in an email. "Over the past several years, we’ve taken a leadership role in this fight, partnering with industry organizations to cut off the flow of money to piracy sites, as well as investing significant time and money to keep copyright-infringing content out of our network."
"The complexity of online advertising has led some to conclude, incorrectly, that the mere presence of any Google code on a site means financial support from Google," the spokeswoman concluded.
Yahoo did not deny that ads served through its Rights Media Exchange business have ended up on piracy websites. But it did say that it has rules in place to stop the flow of advertisements to "sites that violate laws or Exchange Policies," and will stop running ads on those sites once it has been notified of such a situation.
"Our customers are contractually obligated to comply with our Exchange policies, which specifically prohibit introducing content that appears to promote unauthorized use or reproduction of material that is covered by copyright law," said a Yahoo spokesperson in an email with Digital Trends. "We take several active steps to enforce this policy using a combination of targeting technology and human intervention to locate, isolate and eliminate suspect sites. Once we detect sites that violate Exchange Policies, we block them from receiving ads via the Exchange immediately. When we are notified about ads serving via the Right Media Exchange on sites that violate laws or Exchange Policies, we investigate and block the sites as appropriate."
The Annenberg Innovation Lab was not immediately available for comment.
Here is the Lab's top-ten ad networks that help fund piracy:
1. Openx2. Google (including Double Click)3. Exoclick4. Sumotorrent5. Propellerads6. Yahoo (including Right Media)7. Quantcast8. Media Shakers9. Yesads10. Infolinks