Ross Levinsohn, Yahoos EVP of the Americas, said in a statement:

Were thrilled to partner with Microsoft and AOL and bring to market what we believe will be a more efficient, effective and more effortless way to access true premium inventory and formats. There has a been a significant shift in how inventory is bought and sold, and were now 100% focused on controlling our own destiny, working directly with marketers and agencies and driving better returns for our advertising partners.

This new partnership was announced exclusively to ad buyers and publishers which will see each party sell each others Class 2 display ad inventory on their own sites. It is hoped this will yield great benefits, but they need to accomplish a complex unification of business and technology to make it work.

In the past, the unsold ad unit inventory was sold to third parties by Yahoo, AOL and Microsoft as they had no choice but to do so. But now the three companies will sell over the remaining ad impressions to each other in an effort to bring in increased revenue, which will definitely be welcomed by Yahoo whose revenue keeps dropping each month. The revenue generated from this partnership is said to be shared equally by the three companies.

Only two years ago Yahoo led the display ad market with a 16% share in revenue, followed by Facebook with 7 %, AOL closely followed with 6.4 %, Microsoft with 4.6 % and, surprisingly, Google only held 4.5 % of the market. But how times have changed. Google now commands around 66% of the display ad market, thanks to the DoubleClick ad exchange with Facebook in a close second.

So its no wonder Yahoo, Microsoft and AOL have pooled their ad resources, I imagine they are pretty anxious to reclaim the display ad market.

Currently, the partnership extends across sites in the United States. However, there is plans to extend the agreement to Canadian sites also.