Microsoft, AOL and Yahoo Alliance Kicks Off

Microsoft, Yahoo and AOL have signed a common online advertising agreement, in hopes of delivering more precise ads to customers and grab a big bite out of Google's budget.

Microsoft - which owns Bing, the second biggest search engine after Google - has signed an agreement with Yahoo and AOL which will improve the process of purchasing valuable advertising space.

This deal gives all three companies the ability to offer each other's premium online display inventory to their customers while continuing core services under their own rules.

Although advertisers can choose to buy space on one of these three entities (Yahoo! Network Plus, AOL Advertising.com and Microsoft Media Network), the partnership allows purchasing premium contracts that spread across all networks.

Another advantage is that whenever one of the companies has unreserved space, any of the remaining two can fill it. This can be done using a new real-time bidding system, also known as RTB, which offers all firms scale and efficiency.

Microsoft originally announced the alliance last year in November but setting it up took a few more months to turn it into a working solution.

It's worth nothing that Facebook, another major competitor in the online advertising market, has been left out of the deal.

The press release posted on Microsoft.com states the agreement to be activated in the United States in the following months, while Canada is being included by Yahoo! and AOL only.