Does AOL/Yahoo/Microsoft Spell Trouble For Facebook?

The pact between AOL, Microsoft and Yahoo seems like a concerted effort to better compete against Facebook for advertising.

Facebook’s place at the top of the standings when it comes to online display advertising revenue would seem to be fairly secure, since it will reportedly overtake Yahoo this year, if it hasn’t happened already.
Or is it? AOL, Yahoo, and Microsoft might have a little something to say about that statement.
The three companies announced an agreement to sell the graphic ads they would normally funnel through ad networks on each others’ sites, as first reported by AllThingsD.
Google is reportedly the intended target, but going after Facebook likely factored into the respective decision. (Doesn’t it seem like only yesterday that Microsoft sold ads for Facebook?)
According to eMarketer, Facebook’s share of the online display advertising market in the U.S. will soar to 17.7 percent in 2011 from 12.2 percent in 2010, and its revenue from that sector will climb to $2.187 billion from $1.209 billion.
The only other company on the list that is projected to grow in terms of market share was Google, which eMarketer pegged for a 9.3 percent share of the market, up from 8.6 percent in 2010, and revenue of $1.149 billion versus $855 million.
Meanwhile, as for the three companies involved in the pact, eMarketer breaks down their numbers like so:

  • AOL: 4.2 percent share of the ad market and $522 million in revenue in 2011, compared with 4.8 share and $473 million in 2010;
  • Yahoo: 13.1 percent and $1.62 billion, versus 14.4 percent and $1.426 billion; and
  • Microsoft: 4.9 percent and $602 million, versus 5.1 percent and $508 million.

We think Google more than likely is the intended target, considering its dominance in search advertising revenues, given the search giant’s projected 75.9 percent share in 2011, according to eMarketer; but Facebook’s explosive growth is clearly being taken into account in the boardrooms of AOL, Microsoft and Yahoo.
Readers, do you think the pact between AOL, Microsoft and Yahoo is simply a case of strength in numbers, or are further moves ahead? David Cohen is editor of Adweek's Social Pro Daily.