Microsoft hands some of the reins for its display ad business to AOL

The deal comes alongside an expanded partnership with AppExchange for programmatic ad sales

A building on Microsoft's Redmond, Washington campus
A building on Microsoft's Redmond, Washington campus

Microsoft will be handing over its display advertising business to AOL in nine markets as part of a new partnership between the two companies that was announced Monday.

Under the deal, AOL will use Bing to power search through its website, and will operate display advertising, including mobile and video ads, for Microsoft's portfolio in Brazil, Canada, France, Germany, Italy, Japan, Spain, U.K. and the U.S. That means AOL will be powering all the display ads that run in those countries, including on MSN, Xbox, Outlook.com and Skype.

Moving those components of Microsoft's display ad business to AOL could make advertising with the software giant a more enticing option for businesses. Under the new partnership, companies can work with AOL to get their advertisements placed across sites like Huffington Post, Engadget and MSN. Previously, advertisers would have needed to reach out to both companies in order to get similar reach.

The financial terms of the deal between the two companies was unclear. As part of the deal, Microsoft will be transferring its sales and trade marketing employees to AOL. The company declined to comment on the number of employees impacted, but a report by Bloomberg claimed that the deal will affect about 1,200 people. Microsoft continues to operate its display advertising business in markets not included in the deal with AOL.

The search deal is a win for Microsoft, since AOL previously relied on Google to provide its search results. With the partnership, Microsoft will once again expand the reach of its search engine, though it's not clear how many more users the company will gain. Bing also helps power Yahoo's search efforts, thanks to a recently-revised alliance between the two companies.

In addition to its partnership with AOL, Microsoft also expanded its partnership with AppNexus to provide programmatic advertising sales across its search and display ad businesses in Austria, Belgium, Denmark, Finland, Ireland, the Netherlands, Norway, Portugal, Sweden and Switzerland.

Although this is a significant shift for Microsoft, it doesn't mean that the company is getting out of running its advertising business entirely -- quite the contrary. Search advertising through Bing has grown, and the search engine is profitable on its own, according to a report by Search Engine Land. Contrast that with Microsoft's display business, which was frequently listed in the company's financial reports as something that offset gains made by its other businesses.

A company spokeswoman said in an emailed statement that the news is part of Microsoft's overall push to refocus on its core businesses under CEO Satya Nadella.

"Today's news is evidence of Microsoft's increased focus on our strengths: in this case, search and search advertising and building great content and consumer services," she said. "This evolution in our approach to display advertising allows us to keep this focus, while working with industry leaders to market our services."

Last week, Nadella said in a companywide email that Microsoft needed to "make some tough choices in areas where things are not working," and it seems display advertising fits the bill. With the AOL deal, Microsoft seems to get a fairly positive outcome: it no longer has to worry about building out its own display ad network in the affected markets, but can still leverage ads to monetize its free services like Outlook.com.

All this comes the same day that Microsoft revealed it was transferring around 100 engineers and technology used by Bing Maps to Uber as part of a shift away from collecting its own imagery and data for the mapping service.

Join the CMO newsletter!

Error: Please check your email address.
Show Comments

Supporting Association

Blog Posts

​ Creating a purpose-driven brand

So you want to be a brand with purpose. But what does it actually mean to build a brand with real meaning?

Paul Chappell

Partner and managing director, Brand + Story

Customer experience crisis: Proactively mitigating the risk of broken promises

Last Friday, three weeks after United Airline’s spectacular customer experience disaster, customers received a letter from the company’s CEO, Oscar Munoz.

The politics of branding

There have been some real doozies lately. I’m speaking of campaigns where brands have dipped their toe in - or jump straight into the deep end – of the political spectrum, aligning with social causes that seem to be the flavour of the day.

Paul Chappell

Partner and managing director, Brand + Story

Thank you Shane Blandford for carrying my Smarketing vision into KM !

Peter Strohkorb

​CMO Interview: Why aligning sales and marketing drives innovation at Konica Minolta

Read more

Thanks for helping me putting those threads of thoughts together. Simplification and connection - neat idea.

Mark Bayly

Tips from IAG on how to craft human-centred design

Read more

The problem with Box is that they made a couple of big mistakes - they first hired a bunch of unprepared kids and gave them big roles and...

Tim Woods

CMO interview: Why Box's marketing chief is rewarding staff for failing

Read more

At this point, being hit hard will also be subject for a detailed study. In honesty, too early to tell but there are precedents to follow...

Sean Lindeman

Australian Government to abolish 457 visa program

Read more

iflix is really a company with great potential. As a young company, iflix has forward-looking insights and able to identify data-driven m...

Serene Chan

How iflix used consumer intent data to gain 1 million subscribers in six months

Read more

Latest Podcast

More podcasts

Sign in