Microsoft Buys aQuantive for--What?

Posted by: Rob Hof on May 18, 2007

I must admit I’m still trying to get my head around what Microsoft will do with all the advertising properties inside aQuantive, which it just announced it will buy for $6 billion, its biggest acquisition ever. Everyone’s focusing on this as Microsoft’s panicked response to Google buying DoubleClick, a deal announced last month, but I highly doubt even Microsoft would spend $6 billion without thinking long and hard about it. Scott Karp at Publishing 2.0 thinks “it’s clear now that the media and advertising industries, which thanks to Google and Web 2.0 now include the software industry, will be dominated by a new breed of company — the vertically integrated media and advertising company.” Or, it could just be the next bubble, according to Blackfriars’ Marketing.

HipMojo.com has the most concise summation I’ve seen yet:

- MSFT can now build world-class sites (AQNT bought Razorfish).

- MSFT can now plan, buy and create ads (AQNT owns Avenue A’s agency, which is the agency for hundreds of F500 advertisers).

- MSFT can now do so much more with email marketing.

- MSFT’s adCenter just became relevant, since Atlas DMT is DCLK on steroids and miles ahead of Dart for Advertisers.

That’s just online, on MSN.com, it can now offer advertisers a bit more than AOL can, and a lot more than Yahoo! can. In other words, this deal will help MSN catch up to Yahoo!

More importantly, MSFT just skimmed the top of the market, and not the bottom where ad networks like TFSM serve. DCLK also is a contract’s out clause away from losing a client. But AQNT is a relationship-based company and even if MSFT owns them, I don’t see many clients taking their business away because AQNT is a best-of-breed online advertising company, and by buying them, so is MSFT now as well.

In case you’re not an online ad wonk, here are the key pieces of aQuantive, summarized by Microsoft’s own Don Dodge:

* Atlas provides a set of advanced tools for both advertisers and publishers. The Atlas Media Console is an industry-leading toolset providing agencies and advertisers with capabilities to maximize ROI. The Atlas Publisher platform enables publishers to maximize monetization opportunities for their content.

* DRIVEpm provides services to publishers and advertisers that match advertiser campaigns with publisher inventory enabling all parties to maximize ROI.

* Avenue A | Razorfish is one of the largest interactive ad agencies in the world, providing advertisers with industry-leading digital marketing consultation, media planning and buying, and creative services that help advertisers use the online channel to build meaningful, profitable relationships with their customers.

What’s missing from aQuantive, though, is a big ad network, right? (Somebody please give me a scorecard, I can’t seem to get my arms around all the players.) I guess DrivePM qualifies. But Samir Patel, CEO of SearchForce, a competitor of Atlas and DoubleClick’s DART, think Microsoft will look hard at snapping up ValueClick, Tribal Fusion, Burst! Media, or another ad network to complete the picture.

Mike Arrington at TechCrunch also has notes on the conference call.

But I really love Brad Feld’s description:

While old media continues to slow dance (think News Corp / Dow Jones and Thompson / Reuters), new media is turning into a mosh pit at an AC/DC concert.

All the more reason I could really use that scorecard—although if I wait a few more minutes, maybe they’ll all be owned by three or four players, so it won’t matter….

Reader Comments

John Ebbert

May 18, 2007 5:19 PM

It is an enormous acquisition and I think the key part is Atlas. Everything else is going to be 'nice' but having a third party ad serving tool to compete with DART - now part of GoogleClick - is key. It's good for MSFT and for advertisers and agencies who are concerned that the Google monolith will overtake their world and their information.

Rusty

May 19, 2007 10:54 AM

Microsoft seems to be vertically integrating its way into the digital marketing business.

Yes, it will be getting some great technology with Atlas, but it will also be getting important commercial relationships:

- the many ad agencies who use Atlas
- the 30% of the Fortune 500 who use aQuantive's Digital Marketing Services.

By far the biggest part of aQuantive is Digital Marketing Services, which Avenue A|Razorfish is part of.

Microsoft will be getting a much-needed boost to its digital marketing gene-pool.

Even at last week's Strategic Account Summit conference for large ad agencies & advertisers, the company's marketing people (and Bill Gates) still sounded like technical software product managers.

Mike Reardon

May 20, 2007 4:51 PM

One of the question that could be asked is who leads who in what directions. Is Microsoft the leader or will these agencies open totally new directions that they will lead Microsoft?

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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