Why did AOL take over Adap TV

Microsoft: Are the wrong ways in advertising now over?

AOL is taking over almost the entire ad business from the software giant and is switching from Google to Bing

"How do we exploit our adtech potential?" (Montage: Online Marketing Rockstars)


When you hear the name Microsoft, one thing first comes to mind: Windows. Sure, the company has revolutionized the personal computer world with the operating system. But the software giant also tries out other areas from time to time. A long-running project was the - very expensive - attempt to gain a foothold in the advertising business and position oneself as a serious competitor for Google. This attempt can now be viewed as a failure at the latest. Microsoft gives almost everything from the ad sector to AOL and wants to focus more on its core business again.

The industry portal Digiday describes Microsoft's years of efforts in the advertising business as the greatest strategic misstep - the headline of the corresponding article even mentions an autopsy. Business Insider speaks of a slow, long foreshadowing goodbye. Microsoft is separating from almost the entire advertising business. Up to 1,200 employees, both from sales and business development, as well as programmers, are to switch to AOL and from July 16, under the umbrella of the Internet pioneer, which was recently taken over by Verizon, the display business of MSN.com, Skype and Control Xbox in nine markets (USA, Canada, Great Britain, Germany, France, Spain, Italy, Japan and Brazil). The deal also means that for the next ten years, the integrated Google search on all AOL sites (in addition to AOL.com also The Huffington Post and TechCrunch) will be replaced by Microsoft's Bing. That should increase Bing's market share in the USA, which according to comScore was 19.8 percent in March 2015, by a few points and increase the lead over its direct competitor Yahoo with 12.8 percent. Google is still clearly ahead with 64.5 percent, but is slowly losing its lead.

Search engine market share in the United States (desktop use only).

What will happen to the employees and the inventory still managed by AppNexus?

From Microsoft employees who are supposed to decide within ten days whether the employer will be called AOL in the near future, great skepticism should already be heard. One cannot imagine that everyone can really be employed on a long-term basis. After all, you don't need two sales departments. There is also great confusion in the area that is responsible for AppNexus, until now Microsoft's most important partner for programmatic advertising. Microsoft had invested 100 million dollars in the company in 2010. AppNexus is an American marketplace for real-time advertising, i.e. advertising contacts traded in real time, and is aiming for an IPO for the next year. Last year we reported on rumors that the origin of up to 40 percent of the ads delivered via AppNexus could not be verified. On the part of Microsoft, however, it is said that nothing will change for AppNexus and that the company still has access to the inventory of the Windows makers. Anything else would also be a severe blow: the partnership that has existed since Microsoft's investment in 2010 and has now been expanded to include the next ten largest markets as part of the deal extends to a total of 39 markets. Rumor has it that there will be a safe one year period after which Microsoft and AOL will decide how to proceed with all of their inventory. With “One”, the merger of Adap.tv (video), AOP (mobile and display) and the AOL Marketplace, AOL has its own powerful ad technologies.

Why is Microsoft saying goodbye to the $ 74 billion display market right now? The reasons are certainly diverse, but one of the most important is likely to be the negative development in display sales. While the market rose by 22.4 percent last year, according to eMarketer, sales at Microsoft even fell by 15.5 percent. Most recently, the global market share was only 1.2 percent - and the trend is falling. No savings have been made in investments in recent years. In mid-2007 Microsoft took over aQuantive, the parent company of Razorfish and Atlas, among others, for a whopping 6.3 billion dollars. Atlas? Yes, exactly the atlas that Facebook secured for almost $ 100 million in early 2013 and today, in combination with the Facebook ID, is likely to be the biggest trump card of the social network when it comes to the advertising market. aQuantive, which in the long term should actually form the opposite pole to Google's market power, was then on Microsoft's books in mid-2012 with a write-off of 6.2 billion dollars. A month before the aQantive purchase, Google took over DoubleClick for half the price. Microsoft was also interested.

3D Maze, one of the screensavers from Window 95 and 98. Microsoft's advertising strategy over the past few years is very much like a maze.

Dramatic bad investments and realignment of the strategy

But regardless of economic indicators or bad investments, there were serious signs that Microsoft would no longer hold on to the ad business forever. Under the current CEO Satya Nadella, who replaced Bill Gates' successor Steve Balmer in 2014, there were early signs of a strategic change in direction for the company: away from the pure service-and-device business, towards a focus on productivity and platforms with a focus on mobile first and Cloud first. In the course of this, the Xbox Entertainment Studios had to close in the same year, which were supposed to produce special film content for the game console. That wasn't exactly good for the advertisers' trust in Microsoft as a content provider. Shortly thereafter, during the largest wave of layoffs in Microsoft's history, most of the global sales team was disbanded.

And another announcement that Microsoft made at the same time as the AOL deal was announced: In the future, the Windows Group no longer wants to collect data for the Bing Maps itself and sells parts of the technology, rights,

Satya Nadella, CEO of Microsoft

around 100 employees and a data center at the highly controversial transport service Uber. Exact details on the financial terms of all deals are not yet known. Whether AOL will join Microsoft in the long term is also speculation. According to rumors, AOL will receive a commission of 20 to 30 percent of the ad sales generated in the Microsoft inventory. One thing is also definitely certain: Even if Microsoft “only” has (or had) a share of 1.2 percent in the global display market, the various deals should definitely move the various areas.