Orange is to launch a pan-European online ad exchange in a deal with OpenX, the ad technology company chaired by senior News Corporation digital chief Jon Miller, taking on offerings from Google and Yahoo.
The new platform, called Orange Ad Market, aims to launch in the second quarter and provide a more localised challenger to Google's DoubleClick and Yahoo's Right Media online advertising exchanges.
Luc Tran Thang, the Orange Advertising vice-president, said there is an opportunity to provide real competition to the "one size fits all" approach of the major US players Google and Yahoo.
"Simplicity is the key for this market – today it is too complex and too fragmented," he said. "The difference [between Orange and competitors] is that we have a truly multilocal operation and have been local players in [markets including] the UK, France and Spain for a number of years."
Google has seemingly all but sewn up the search advertising market, with a share of more than 80% in most of Europ. But the battle for the estimated €3.8bn (£3.38bn) pan-European online display business is far from over.
The US search giant entered the display ad market with its $3.1bn (£1.9bn) acquisition of DoubleClick in 2007. But it only upgraded the service to offer a full online ad exchange in September. In the same year Yahoo paid $680m (£338m) to take control of the 80% of ad exchange Right Media that it didn't already own.
France Telecom-owned Orange said that its existing network of online publishers, which includes those of Unanimis, the UK business it acquired for £15m last year, will be plugged into the new online ad exchange.
While the amount of money advertisers are ploughing into search ads is continuing to climb, last year the online display ad market contracted as marketers switched their budgets away from the medium.
"The [digital display] market has not been efficient and has been unproductive," said Damon Reeve, the co-founder of Unanimis and a director of OpenX. "This has been one of the biggest barriers to a large-scale shift in investment in display online."
Tim Cadogan, the former Yahoo senior executive who now heads OpenX, said the perception that an ad exchange will operate like eBay and see valuable inventory driven down in price in an auction-style process was wrong.
"There is a perception that auctions drive prices down, but that is not true if they are run correctly," he said, pointing out that on OpenX media companies can offer ads at a reserve price to maintain value.
France Telecom has previously stated that it wants to boost revenues outside core areas such as telephony charges from 9% of total revenue to 20%.
• To contact the MediaGuardian news desk email editor@mediatheguardian.com or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000.
• If you are writing a comment for publication, please mark clearly "for publication".
