Possible Yahoo-AOL Merger Overshadowed by Revenue Challenges

Amid speculation over a possible merger between internet and media giants Yahoo and AOL, Google's chief rivals are developing a strategy to compete in the online advertising marketplace.

Microsoft, AOL and Yahoo have begun pitching ad leaders in a deal that would allow advertisers to buy display ads on sites that the respective companies don't sell directly to marketers, according to the Wall Street Journal.

The announcement comes as AOL and Yahoo debate the merits of a merger, specifically the leadership roles under such an organization.

"The most obvious and immediate gain of a possible Yahoo-AOL merger is scale," reports Forbes magazine. "As of July 2011 both Yahoo and AOL still feature among the top 5 sites in the U.S. with around 178 million and 105 million unique visitors respectively."

But both companies have been struggling to find a strategy to monetize this traffic, which has no doubt been a factor in developing an advertising program with Microsoft.

Nonetheless, Forbes argues that a Yahoo-AOL merger would only complicate the real challenges already faced by both companies, noting primarily the substantial banking costs as well as the time and money spent re-structuring the new enterprise.