Microsoft Gets Its Ad Network
Yesterday, a lot of people thought Microsoft had missed out on 24/7 Real Media, a display ad network that was purchased by communications group WPP for $649 million, just a month after DoubleClick reportedly passed on Microsoft to accept a $3.1 billion acquisition from Google. Always a bridesmaid, never a bride, was the sentiment. But today, Microsoft announced the purchase of aQuantive, a 10-year-old, publicly traded digital marketing company in an all cash deal worth approximately $6 billion -- the biggest acquisition in Microsoft history.
The acquisition has continued a hot month of consolidation across ad networks. Starting with Google's acquisition of Doubleclick for $3.1B on April 13. Yahoo! spent $680M to purchase Right Media on April 30 and AOL acquired a controlling stake of German ad-serving company ADTECH AG on Wednesday, before WPP's purchase of 24/7 yesterday, and Microsoft's move today. Mike Arrington has more on today's announcement as well as good notes from the conference call. Anyone who wants to listen to a recording of the call, dial 800-774-9248 (international: 402-220-0372).
So who is aQuantive? The Seattle-based company owns Avenue A | Razorfish, Atlas and DRIVEpm, which Microsoft calls "one of the industry’s most successful families of digital marketing service and technology companies." The company was originally founded in 1997 as Avenue A, and went public in 2000 under that name. It became aQuantive in 2003.
In a press release, Microsoft's CEO Steve Ballmer said that the acquisition "represents the next step in the evolution of our ad network from our initial investment in MSN, to the broader Microsoft network including Xbox Live, Windows Live and Office Live, and now to the full capacity of the Internet. Microsoft is intensely committed to creating a thriving advertising business and to partnering closely with all key constituencies in this industry to help maximize the digital advertising opportunity for all."
One of the most interesting parts of the conference call came when Microsoft was asked whether this purchase would affect their view of the Google/DoubleClick acquisition, which they have criticized as a violation of anti-trust laws. Microsoft said no, Google's acquisition will hurt competition since they are already such a major player in the businesses DoubleClick operates, whereas Microsoft does not operate in any of the areas aQuantive does, they say. The company does expect antitrust review in the United States, however.
What do you think of Microsoft's mega acquisition? What does it mean for the advertising market at large? Will it be enough to set Microsoft's advertising sales business on track to take on Google? Were Yahoo! and AOL just left in the dust?
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A developer from Avenue A | Razorfish taught a databases course I took at Drexel University. It was a night class - he took a train from New York after work to teach it once a week. Worst class I've ever taken there. I was correcting him all the time because the mistakes were too much to ignore... I can imagine the frustrating hours other students in the class would have spent trying to do the assignments if they tried to use GROUP BY instead of ORDER BY for row ordering like he taught.
Anyway, good for Microsoft, finally getting its ad network. Online advertising is really getting serious. Google AdWords is so cluttered I can barely use it because it's now packed with interfaces for creating text ads, image ads, video ads, audio ads, print ads, pay-per-action ads, site targeted ads...
I wonder what Microsoft will do with the Razorfish part of the business, which strikes me as a strange, irrelevant bastard child in this transaction. Financially, it's probably not significant enough to be a blip on the radar, at least for a while.
According to the press release, Avenue A | Razorfish fits in this way:
I know this is more than just about display advertising on Microsoft's web properties. MS wants to build out its advertising capabilities on the Xbox and IPTV and other rich media products.
I specifically left Avenue A out of my question because that part makes sense to me. As the analytics half of the Avenue A | Razorfish marriage, it's a good complement to what Microsoft was really keen to acquire in the Atlas platform. Website development is still the bulk of what the Razorfish piece is about, and I don't see how that fits in or benefits Microsoft.
I better put up my own online media/advertising website network soon. Maybe Ask.com is on the hunt as well. :-)
Personally, I believe small start ups like FreeIQ an Agloco will take a part of the markets that Google, Microsoft et. al. are seeking to control.
I could be off my Rocker, but with some real money behind them and a couple of years we could be talking about how the big guys missed what the adverizers really wanted, especially the small business community.
Online Advertising is in full swing. I think its going to go great for Microsoft. I have been reading about other acquisitions by Google, Yahoo and Adify. Read more about Online Advertising: More Acquisitions.