According to a statement released at 12:01am tonight, Microsoft and Facebook have formed a strategic alliance that grants Microsoft exclusive ad sales rights on Facebook. The rumored three-year deal was hashed out in only the last week after Google agreed to pay MySpace a minimum $900 million over the next three years in shared advertising revenue.
Microsoft will be the exclusive provider of banner advertising and sponsored links on Facebook using Microsoft’s digital advertising solutions and the Microsoft adCenter platform.
…The two companies began talks about the relationship only last week and expect the new advertising experiences to appear in the early fall.
Historically, social networking sites have had a hard time monetizing their traffic through traditional CPC and CPM ads, though Facebook is rumored to perform better than most social networking sites in general. It appears that Google’s initiative with MySpace lit a fire under Microsoft BD leading to what are likely favorable terms for Facebook. No word yet on guaranteed payouts over the life of the deal.
Update: Coverage in New York Times