AOL takes over Microsoft's display ad business

AOL will take over Microsoft's display ad business and sell across the software giant's properties. AOL will also convert to Microsoft's Bing search Jan. 1.

Microsoft has unloaded its display ad business to AOL, which in turn will use Bing search starting Jan. 1.

The 10-year deal, which will simplify and consolidate the players for chief marketers, comes as Microsoft is honing its focus and selling ads doesn't exactly fit. The AOL partnership comes as Microsoft was about to start selling its own Bing ads under a revised Yahoo pact.

For AOL, now a part of Verizon, the Microsoft partnership gives it more inventory to sell. AOL will manage and sell Microsoft's display, mobile and video ads in nine large global markets. Most of the markets---United States, U.K. and Japan---are mature, but AOL does get a foothold in Brazil as part of the deal.

Also see: Reading between the lines of Nadella's state of the union missive

AOL will also sell ads across Microsoft's various brands such as Outlook, Xbox and Skype. Before the sale to Verizon, AOL had transitioned to more of an ad network focused on programmatic as well as high-end brand ads. AOL owns Huffington Post, TechCrunch and Engadget to name a few properties.

Terms of the deal weren't disclosed, but Microsoft gets to outsource its ad sales, focus better and land AOL as a search partner. Bloomberg reported that about 1,200 jobs at Microsoft will be cut. It's unclear whether that figure is accurate since employees could be transferred from Microsoft to AOL in a practice similar to an outsourcing deal.

AOL will begin using Bing for its search across all of its properties.

Add it up and the partnership looks like a win-win. Microsoft will gain about 1 percent of search share. AOL gets a big customer for its digital ad platform and more inventory.

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