Former Yahoo interim CEO Ross Levinsohn thinks the deal struck Monday between Microsoft and AOL is exactly the kind of move Yahoo should have made when he was there.
The deal will see Microsoft hand over huge chunks of its display advertising business to AOL’s sales team. In exchange, Microsoft’s Bing will now be the default the search across AOL’s properties.
Levinsohn was the interim CEO at Yahoo for a few months back in 2012 after running the company’s sales organisations for some years. (He replaced Scott Thompson, who left after outsiders discovered he didn’t have a computer science degree, in contrast to claims on Yahoo’s web site and elsewhere.)
Levinsohn had a shot at becoming permanent CEO, but Yahoo hired former Googler Marissa Mayer in July 2012. She’s been CEO of the company ever since.
Earlier today Levinsohn commented on a LinkedIn post about the AOL/Microsoft deal from Dan Bonert, head of category sales at AOL. Levinsohn basically said this was the deal he wished Yahoo could have pulled off three years ago.
Here’s his comment:
For Levinsohn, the AOL/Microsoft deal is all too familiar. It’s pretty much the deal he was proposing to the Yahoo board when he was vying to become its permanent CEO back in 2012.
As Business Insider’s Nicholas Carlson details in his book “Marissa Mayer and the Fight to Save Yahoo,” Levinsohn wanted Yahoo to hand over its search business — which at the time had thousands of people working for it within Yahoo, despite the fact that Microsoft Bing’s technology powered the search function on Yahoo — to Microsoft completely. In exchange, Yahoo would take on ad sales for Microsoft’s properties, including its huge portal MSN.
The idea was that Yahoo could never reasonably compete with Google when it came to search with its own in-house platform, but with partnerships, it could become a huge seller of display advertising to rival Facebook and Google.
Back then it didn’t have so far to go in order to catch up, especially if it added Microsoft.
This is what the market looked like in 2012:
And here’s what it looks like now. Facebook and Google are way, way ahead.
Here was Levinsohn’s proposal back in 2012, according to the book (an excerpt can be found here):
Levinsohn told the board that, under his direction, Heckman had begun negotiating a deal with Microsoft to exchange Yahoo’s search business for Microsoft’s portal, MSN.com, and large payments in cash. Levinsohn and Heckman had also been talking with Google executive Henrique De Castro about turning over some of Yahoo’s advertising inventory. There was also talk of unloading some of Yahoo’s enterprise-facing advertising-technology businesses into a joint venture involving New York-based ad tech startup AppNexus.
The similarities between the AOL/Microsoft deal announced Monday are uncanny. Microsoft is handing over ad sales to Yahoo, AOL is handing over search to Microsoft (it had previously outsourced it to Google), and Microsoft is even expanding its deal with AppNexus to sell ad inventory programmatically to more markets worldwide.
AOL’s Bonert responded to Levinsohn on LinkedIn agreeing that such a deal back in 2012 between Yahoo and Microsoft “would have created a powerhouse in the display marketplace.”
But appointed Mayer who opted not to take on Levinsohn’s plan. Levinsohn left Yahoo and later went on to become the CEO at Guggenheim Digital Media, a media company that invests in and operates properties such as the Billboard Magazine, The Hollywood Reporter, and Adweek. He has now left Guggenheim and serves on the board of directors of several media and ad tech companies.
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