Portals’ Ad Sales Partnership Finds Legs … Finally

Technical issues overcome, but perception problems remain

Conversations with media buyers about the AOL, Microsoft and Yahoo ad sales alliance have trended from interest to disillusion. When news first broke about the partnership last September, everyone asked each other, “What do you think about this?” Eleven months later the question’s become: “What happened with that?”

There have been blips of life. In February, Yahoo announced that AOL inventory was available via Yahoo’s Right Media Exchange, and in April, Adweek began hearing that the partnership’s other exchange, Microsoft-backed AppNexus, had begun housing Yahoo inventory. On March 15, the companies announced that the partnership was live. But that’s been roughly the extent of things—at least insofar as media buyers are concerned.

“If it’s started at all, they’re not doing a good job at marketing it. I think there was an interesting story that was starting to be told at the end of last year, and then it’s been kind of quiet ever since,” said Adam Shlachter, managing partner and digital practice lead at media agency MEC. Several other media buyers concurred with Shlachter’s assertion but declined to speak on the record.

Not helping the partnerships' perception issues are recent organizational changes at the companies involved—most notably Yahoo—which has industry executives questioning the deal’s long-term viability. Within the last month, its chief architect, Ross Levinsohn, and lieutenant Jim Heckman left the company. While Levinsohn is said to be a primary player in the partnership's coming-together, the three executives leading its execution—AOL svp of publisher services Dave Jacobs, Microsoft Advertising senior director Peter MacDonald and Yahoo gm of audience and performance advertising Peter Foster—remain at their respective companies. The three principals meet formally each quarter to discuss the partnership but also hold more frequent informal chats. All three admitted to a slow rollout.

“In general I think we all expected that we wanted to get the deal done and then work through the issues later rather than try to get everything 100 percent figured out behind the scenes before we launched. It wasn’t entirely unexpected that it would take through Q1 to work out some of the kinks,” said Jacobs, adding that the partnership launched in the middle of Q1 and found its legs throughout Q2.

According to sources, those kinks came in two areas: technology and sales. There were delays in linking the partnerships’ three bidders with its two exchanges, and sales teams needed clarification on how to make sure insertion orders were being placed across all three portals’ inventory. The executives downplayed those difficulties.

"We knew it was going to take time [to make the tech stacks talk to each other], and it took about exactly the amount of time as we thought to get to where we are today,” said Foster.

“Over the past quarter, Microsoft has seen dramatic gains with the Yahoo-AOL-Microsoft alliance, specifically revenue growth in excess of 50 percent month over month. It did take a while to connect the back ends, but we are now running, not crawling,” said MacDonald.

As for AOL, Jacobs said the company had “a pretty smooth transition” because it had already been purchasing Yahoo and MSN inventory pre-partnership through its ad network Advertising.com.

The challenge now for the three companies is getting buyers to see that the pace has picked up.