The three parties claim the pact will simplify the process of booking scalable display ad campaigns for agencies, as well as enhance the value of publishers’ inventory.

The deal will see the three partners integrate each other’s real-time bidding (RTB) technologies to sell “nonreserved” or remnant inventory to boost scale.

The pact prevents each of them from having to offload their inventory on to third-party ad networks and will take effect from early next year.

Microsoft’s Advertising Exchange and Yahoo’s Right Media Exchange will initially serve as the two marketplaces to source inventory and AOL may opt to use its own exchange, according to a joint statement from the three companies.

The three companies claimed they will begin selling the inventory in such a manner beginning in the US market, making no mention of exporting the model to the UK yet.

However, a source within Yahoo indicated that such a deal would only apply to the US market when asked to comment on earlier reports of the pact.

Ross Levinsohn, Yahoo’s executive VP for Americas, said, “There has a been a significant shift in how inventory is bought and sold, and we’re now 100% focused on controlling our own destiny, working directly with marketers and agencies and driving better returns for our advertising partners.”

Rik van der Kooi, Microsoft’s VP of its advertising business group, said the three companies would still be able to differentiate their respective offerings – Yahoo Network Plus, AOL’s advertising.com and the Microsoft Media Network.  

The deal represents an unprecedented level of cooperation between the three companies. Microsoft and Yahoo implemented their search alliance in the UK last month and AOL is rumoured to be considering a takeover bid for Yahoo following the exit of Carol Bartz as CEO.

Each party has suffered as Google moves more aggressively into the display ad sales market and Facebook continues to chip away at online budgets that would have traditionally been channelled through online portals.