In a move which has the potential to rival Google’s advertising dominance, a new 10-year agreement between AOL and Microsoft will see Microsoft’s Bing replace Google as the search engine providing all organic search results on AOL sites from 2016.
Under the display search deal, AOL will also manage and sell Microsoft’s display advertising inventory across MSN, Outlook.com, Xbox, Skype and ads in apps in nine countries.
This year, search ads are forecast to account for $81.6 billion worldwide, according to eMarketer, with the figure estimated to rise to $130.6 billion by 2019.
Of the $81.6 billion, Google is expected to account for almost 55% of the market share, while Microsoft will make up just 4.2%.
Because of Google’s huge and unrivalled market share, Ian Woolley, general manager EMEA, Ensighten, said that it will remain to be seen as to whether the deal offers any real competition.
“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.
“What will be interesting is to see how the companies combine data, and what role Verizon will play within the partnership. 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.”
Woolley added that there will undoubtedly be privacy concerns that need ironing out, “but if they can manage to effectively bring these disparate data sets together, they could offer some incredibly robust audience targeting to brands competing to deliver increasingly personalised customer experiences.”
US telecoms giant Verizon announced in May that it will buy AOL in a deal worth $4.4 billion (£2.8 billion), giving Verizon access to AOL’s automated ad platforms and video content – as well as global content brands The Huffington Post, TechCrunch and Engadget.
Ben Wood, global president of iProspect, said that at a time where online advertising is increasingly data-driven, and a greater share of ad budgets are flowing into programmatic, the expanded deal between Microsoft and AOL is a “smart move.”
“It’s one born primarily from driving efficiency in the buying and selling of inventory, as well as affording Microsoft a greater share of the search market – and even if relatively small it will still be significant to the business,” said Wood.
“Microsoft also has a lot to offer to brands across the likes of MSN, Outlook and Xbox in particular, so my hope is that knowledge of the innovative solutions offered across these properties is retained.”
