Merely a couple of days after CEO Sataya Nadella emailed his employees saying the company would have to “make some tough choices in areas where things are not working,” Microsoft announced it would be shutting down its own ad display business and forming a new partnership with AOL.
As WinBeta reported yesterday, this move allows Microsoft to focus on its search engine and get out of the crowded and competitive ad display business, while gaining new partners to promote Bing. Now, Business Insider is reporting that former Yahoo CEO Ross Levinsohn posted on Linkedin that Microsoft and AOL’s deal “makes total sense and [is] very smart.”
Levinsohn goes on his post to say such a deal between Yahoo and Microsoft three years ago could have had a “significant impact in the market” but Yahoo “went in another direction.”
Business Insider’s Lara O’Reilly dug a little deeper into the quote, citing a book by her colleague, to find that Microsoft and AOL’s deal is strikingly similar to a deal Levinsohn proposed in 2012 during his short tenure as Yahoo’s interim CEO.
According to Nicholas Carlson’s book “Marissa Mayer and the Fight to Save Yahoo,” Levinsohn had,
“begun negotiating a deal with Microsoft to exchange Yahoo’s search business for Microsoft’s portal, MSN.com, and large payments in cash.”
The deal never happened though as Mayer decided against it when she was appointed CEO.
O’Reilly goes on to also cite total ad display revenues by company, comparing 2012 figures to 2015, in an effort to demonstrate how much more impactful a 2012 Yahoo Microsoft deal would be on the ad display market compared to the AOL Microsoft deal announced this week.
Using the figures she cites, a Yahoo Microsoft deal would have combined to be 13.5% of all US digital display ad revenue in 2012. Comparatively today, Microsoft and AOL combined make up just 5.1% of all US digital display ad revenue. The main difference being between now and 2012 is that in just 3 years Facebook and Google have grown so much in ad display; consistently growing by double digit percentages year over year.
While it remains to be seen how the deal will fair in the ad display market, the new partnership will increase Bing’s use as a default search engine across multiple new websites.Further reading: AOL, Marissa Mayer, Microsoft, Yahoo