Microsoft Corp has been re-aligning its priorities for some time now, and its decision to step back from the advertising business is an extension of this endeavor. The company has reached an agreement with AOL and the latter will now manage the responsibility of mobile, display, and video advertisements on various Microsoft properties in nine markets, including the United States. The move will also entail about 12,000 employees from Microsoft’s advertising business getting AOL joining letters, said a source close to the development.
Over the past few years, Microsoft’s interest and investments in digital advertisements has been dwindling. This is in stark contrast to Google, whose revenues from advertisements have seen stellar growth. Having sailed into the digital advertising business with ambitious investments, things didn’t really go as planned for the tech giant, compelling it to retrench steadily.
As part of the AOL pact, the Bing search engine, which Microsoft runs, will power advertising and search results on various properties of AOL for a period of 10 years. With this, Bing will replace Google Inc. as AOL’s long-term search technology partner. According to reports in various media, there were no comments on the development from Google.
Ever since Verizon Communications Inc. acquired AOL in a US$4.4 billion deal, the focus on making a greater impact in the digital advertising domain has intensified. In the grander scheme of things, Microsoft’s digital advertising assets will give AOL more inventory to realize its ambition.
Microsoft’s CEO Satya Nadella has said recently, and quite publicly at that, that the company needs to focus more on core technology areas. As it strives to stay competitive in the emerging technologies sector, its interest in peripheral businesses will likely whittle out. The head honcho has stated in clear terms that this shift of focus may see the company make a few tough choices on its fringe business areas.