Google Invests Money into AOL Ad Networks

Google, Time Warner Strike $1 Billion Deal on AOL

by Yaroslav Lyssenko

[ 12/28/2005 | 10:53 PM ]

According to a report at CNET News.com, Google will invest $1 billion for a 5% stake in Time Warner’s America Online unit as part of a partnership that expands the company’s existing search engine deal to include collaboration on advertising, instant messaging and video.

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“Under the new global advertising partnership, AOL will be able to sell all types of ads, including search, banner and display, across Google’s network, which includes Google’s own Web sites and the publisher sites that display Google-powered ads. Google’s home page and core search results page will stick with text-only ads, while graphical ads could appear on Google’s video and image search sites,” said Marissa Mayer, Google’s vice president of search products and user experience.

The companies said they would collaborate on online video search and showcase AOL’s premium video service within Google Video, as well as allow Google Talk and AIM instant messaging users to communicate with each other, the news-story claims.

While the cooperation of two companies is expected to be mutually beneficial, some analysts believe that Google had precise reasons to invest money in AOL.

“I don’t see it as a strategic technology deal. I see it more as a tactical advantage, especially against Microsoft. It gives Google a laboratory or testing ground for them to test new ideas about advertising. I don’t see the AOL network to be of strategic value to either Google or Microsoft,” said Safa Rashtchy, analyst at Piper Jaffray.

Google had 48% search market share in October, compared with 22%  for Yahoo, 11% for Microsoft’s MSN and 7.2% for AOL, according to Nielsen/NetRatings.

• CNET News.com: Google, Time Warner Strike $1 billion Deal on AOL.