Microsoft to offload display ads biz to ... hang on, AOL?

10-year search deal will see Redmond outsource adverts in major markets

Don Draper is Sad

Microsoft has retreated from its online display ads business having struck a deal with AOL.

Under the plans, announced on Monday, Redmond will hand off ads sales and management on several of its prime online properties to AOL.

Fnancial terms of the agreement were not disclosed.

AOL will take over ads for such sites as MSN Homepage, Outlook.com, Skype, Xbox, and ads in apps. Markets affected include the US, UK, Canada, Brazil, France, Germany, Italy, Japan, and Spain, the companies said.

"The arrangement will improve ad campaign efficiency and effectiveness through the delivery of scaled premium inventory across display, video and mobile, and enables marketers to deeply target premium audiences globally in key verticals, including autos, entertainment, health & fitness, lifestyle, money, news, sports, travel, and weather," AOL gushed in a canned statement.

The partnership also includes a new 10-year arrangement in which the AOL portal will switch its search engine to Bing from 1 January 2016, while AOL will sell and manage ads both on its own search site and on Microsoft's.

"This deal is further evidence of the quality of Bing results and the performance of the Bing Ads marketplace," Microsoft corporate veep Rik van der Kooi said. "And we will continue our focus on delivering world class consumer services and content and look forward to partnering with AOL to market them."

Online ads have never been a big biz for Microsoft. Compared to its rival Google, which earns in excess of 90 per cent of its revenue from its various ad businesses, Microsoft tucks its online ad sales into its "Devices and Consumer Other" reporting segment, which itself accounts for only about a tenth of the software giant's revenue.

Bloomberg had earlier reported that around 1,200 jobs at Microsoft would be affected by the deal. MS later confirmed that it planned to shunt its sales and trade marketing employees over to AOL. ®


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