Time Warner has been holding talks with both Microsoft and Google over AOL, sources familiar with the situation have told Reuters and other media.

The Journal said that, under negotiations between Time Warner and Microsoft, AOL would drop Google as its main Internet search provider and switch to Microsoft’s MSN service.

Source: MSNBC

At present, this is a long term rumor at best. MSN is still in an invite only beta, and they’re still working on scaling out their product. At earliest, it will be a q1 06 product release, with the possibility of being q2.

I had dinner with part of the MSN team last night, and they were discussing the challenges they expected, and other’s they never considered in part of running their own PPC program. There are a few major difficulties with running a ppc engine:

1. Scale
2. Customer support
3. Distribution
4. Click Fraud

At present, when MSN rolls out with MSN only distribution, their PPC product will reach as estimated 12-14% of the internet audience. A deal with AOL would put them as a solid player (hence, improving the distribution requirement above). It would still make them the 3rd largest PPC distribution, but it’ll become a property that everyone needs to learn and take advantage of.

MSN has some very interesting demographic targeting options that are much more sophisticated than the other PPC programs. It’s not a simple program, but it allows a lot of control the other PPCs just don’t have.

Still a rumor, but this deal would be a major victory for a PPC program that has yet to be tested on a mass scale.

The PPC arena will only get more interesting and more competitive in 2006. MSN’s entrance will further complicate the entire PPC issue. This will probably be good for agencies, and more difficult for those doing PPC in-house.

While it strikes a blow against Google, it is a small blow. Google’s content syndication makes it the largest distribution environment on the entire web. A single distribution change will not affect them to a large extent, but it will help MSN enter the game with something to offer new advertisers.

• Skype Toolbar allows Local Searching
• Don’t let someone buy or rent your AdWords Account!
• Google Launches Ad Preview for Mobile
• Low Quality Keywords CAN Lower Other Keyword’s Quality Scores
• CNN to switch to Yahoo Search