Yahoo, Microsoft and AOL Forge Display-Advertising Accord

Yahoo! Inc., Microsoft Corp. (MSFT) and AOL Inc. (AOL), the three largest Web portals in the U.S., formed a partnership that lets advertisers buy ad space on the sites using a single exchange.

The agreement is aimed at making the buying process easier and boosting demand for display advertising, such as banner ads, the companies said today in a statement. The new service, which will be offered through Yahoo and Microsoft initially, should be available by early 2012.

Yahoo, Microsoft and AOL are trying to cope with mounting competition for display advertising from Google Inc. (GOOG) and Facebook Inc. Facebook will become the No. 1 provider of display ads in the U.S. this year, overtaking Yahoo, according to EMarketer Inc. Google should be No. 3, followed by Microsoft and AOL, the research firm said.

“We’re thrilled to partner with Microsoft and AOL and bring to market what we believe will be a more efficient, effective and more effortless way to access true premium inventory and formats,” said Ross Levinsohn, an executive vice president in charge of the Americas region at Yahoo. “We’re now 100 percent focused on controlling our own destiny, working directly with marketers and agencies and driving better returns for our advertising partners.”

Under the partnership, each company will continue to make its own decisions and compete with one another, according to the statement. The service won’t include all of the companies’ ad space. The deal will apply to the U.S. and Canada, though Microsoft will not be part of the Canadian partnership.

Shares of Redmond, Washington-based Microsoft rose 1.3 percent to $27.16 today, while Sunnyvale, California-based Yahoo increased 1.8 percent to $15.97. AOL, located in New York, climbed 1.9 percent to $15.73.

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net.

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