Microsoft’s Ballmer era effort to take on Google in display advertising came to an abrupt end Monday with the company handing over the entire business, employees and all, to AOL, Inc.

The deal will see AOL take over responsibility for sales of display, mobile and video ads on Microsoft properties in the U.S. and eight other markets: Brazil, Canada, France, Germany, Italy, Japan, Spain, and the United Kingdom.

All of Microsoft’s 1,200 employees working in their display advertising division, including engineering and sales, will be offered positions at AOL, according to a source quoted by The Wall Street Journal.

Of note, Microsoft is retaining its search advertising business, which would appear to be clearly more profitable for the company than display ever was.

In return for taking over Microsoft’s display advertising business, AOL will switch to using Microsoft’s Bing search engine to provide search results across AOL properties, replacing existing provider Google, Inc.

Advertising on search pages made through AOL properties will also now be provided by Microsoft.

“Today’s news is evidence of Microsoft’s increased focus on our strengths: in this case, search and search advertising and building great content and consumer services,” a Microsoft spokesman said in a statement. “This evolution in our approach to display advertising allows us to keep this focus, while working with industry leaders to market our services.”

In a separate statement, AOL President Bob Lord added “We have enjoyed a terrific relationship with Microsoft, and this expanded partnership is a win for both companies and our advertiser partners as our industry continues to rapidly transform and evolve. This collaboration further validates our leadership position in digital advertising and the shift to automation, while also allowing Microsoft to focus on what they do best: industry leading services and search innovation.”

Win all round

While years overdue, Microsoft’s exit from display advertising is both a win for AOL, as well as Microsoft itself.

AOL gets the pile of extra inventory across Microsoft properties as diverse as MSN through to the XBox gaming console; AOL President Bob Lord’s own words describe the benefits of the extra inventory well: “I can go to market now with a pretty comprehensive scale play.. we now consider ourselves to be a must-buy.”

For Microsoft, it’s another move as part of Chief Executive Officer Satya Nadella’s push to focus on technology areas where it has the biggest opportunities for success, following the bloat and failure of the Ballmer years.

Ballmer drove Microsoft’s push into display advertising, running on a belief that it was the only way to combat Google; famously Microsoft acquired display advertising firm aQuantive, Inc. for $6.3 billion in 2007, a figure it subsequently had to write off to the tune of $6.2 billion in 2012.

The short version is Microsoft royally screwed up, and this announcement closes the door on the last chapter of this sordid failure.

The display advertising deal is effective immediately, however AOL will not transition to a Bing-powered search solution until January 1, 2016.

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