AOL, Microsoft and Yahoo form an ad pact to take on Google

For the past decade, Google has raked in billions of dollars from its search advertising revenues. In recent years, Google has moved aggressively into display ads and even ousted Yahoo as the biggest display ad player in the U.S.

AOL, Microsoft and Yahoo are also in the online advertising game, and until today have been in competition with one another. But as AllThingsD reports, a new pact has been formed and the three companies are going to start selling ad inventory on each others’ sites to take on Google and growing ad networks like ValueClick, 24/7 Real Media and Tribal Fusion.

AllThingsD’s Peter Kafka learned of the news after Ross Levinsohn, the head of Yahoo America, AOL CEO Tim Armstrong and Microsoft’s COO Dave O’Hara briefed a group of top Web publishers and ad buyers at a dinner presentation last night in Manhattan. He writes: “The idea, according to people who attended the meeting: Microsoft, Yahoo and AOL have agreed to sell each other’s “Class 2 display” inventory — graphic ads the companies can’t sell on their own and would normally hand over to ad networks.”

The ad pact will start at the end of 2011 and will not require exclusivity so each company is free to work with any ad network, even Google. I imagine it will still require a bit of training to get their internal sales teams to start selling competitors’ inventory. By banding together in Musketeer style, the three companies will share ad revenues in hopes of increasing their total earnings in Google’s shadow. The online advertising world is one of the most competitive landscapes and as companies go head to head in the language of CPM, CPC, DSP and conversion tracking pixels….it’s like the wild west for geeks out there.

Featured image: Shutterstock/Craig Hosterman