How to compete with Google in the display advertising space? Late last year, three unlikely allies, Yahoo, AOL and Microsoft, forged a pact that would allow each company to sell certain display ad inventory for the others.

At the time, Yahoo and Microsoft decided to use different ad exchanges, while AOL remained undecided.

Today, AdWeek is reporting that AOL has decided to use Yahoo's Right Media Exchange (RMX). As AdWeek notes, this is somewhat unexpected, as there was a general perception that RMX was too closely connected with Yahoo, and consequently, Microsoft's exchange partner, AppNexus, would probably wind up handling AOL's inventory:

The Yahoo, AOL and Microsoft partnership has been widely perceived as an effort to counter Google’s advertising exchange, but many expected that Microsoft’s exchange would emerge as the partnership’s primary platform with the possibility that Yahoo would sell or shut down RMX. Insiders in the ad tech world often heap praise on AppNexus' technology, while often criticizing RMX.

One big question is how this could affect AOL's ad network, SVP David Jacobs told AdWeek that AOL's RMX agreement "provides for to continue to access AOL inventory for our existing advertisers while providing increased competition through additional demand sources," but it's possible that advertisers, when given the choice, will be more inclined to buy through RMX.

That said, AOL CEO Tim Armstrong doesn't appear worried, stating that, thanks in large part to "machine-learning", can be thought of "as more of a Goldman Sachs-type player on top of the exchanges where we spend a lot of time, energy and technology trying to figure out the value of individual things being traded and we have a proprietary set of technologies around that."

Some might suggest that Armstrong is a tad overconfident for invoking the name Goldman Sachs in his description of, but one thing is clear: in an effort to move inventory and compete with Google, companies like AOL, Yahoo and Microsoft will probably continue to weave increasingly tangled webs.

Patricio Robles

Published 3 February, 2012 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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