AOL, Yahoo and Microsoft Partner to Compete with Google

Though AOL (NYSE:AOL), Yahoo (NASDAQ:YHOO), and Microsoft (NASDAQ:MSFT) compete for ad dollars, they are all teaming up to make themselves more competitive against the Internet’s advertising giant, Google (NASDAQ:GOOG).

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Each of the three companies will start selling ad inventory on each others’ sites as part of a strategy to help them increase their share of ad spending, helping them better compete against Google but also allowing them to get back some of what has been lost to ad networks in recent years. Executives from all three companies hope to convince big Web properties to share some of their ad inventory as well, and to get some big ad holding companies to funnel their purchases through their new consortium.

AOL, Yahoo, and Microsoft have all agreed to sell each others’ Class 2 display inventory, which are graphic ads the companies can’t sell on their own and would normally hand over to ad networks to sell. For example, if Microsoft were to receive a big order for a certain kind of ad impression, it would fill that order with its own inventory as well as with what’s available form its partners, AOL and Yahoo. The three companies would then share revenue on the ads, and will supposedly take a larger cut than if a third-party ad network sold their ads. The plan is supposed to start by year’s end.