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Microsofts big revenge – buys aQuantive in $6 billion-deal May 18, 2007

Posted by John in Technology.
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With Friday came Microsoft’s big revenge. After having been described as the company “left dancing alone” in the big players ongoing mass-acquisition of advertising firms, Microsoft today announced it will buy aQuantive in an all-cash transaction valued at approximately $6 billion.

This is a huge deal following Google’s acquisition of DoubleClick, Yahoo’s acquisition of Right Media and WPP’s acquisition of 24/7 Real Media – that was announced yesterday. “The deal is an indication of Microsoft’s efforts to catch up in the growing online advertising space,” Chris Isidore writes at CNN Money.com.

It also sets a trend.

“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,” Scott Karp writes at Publishing 2.0 adding that these “vertically integrated media and advertising companies will battle it out for control of all of the dollars in the online advertising value chain”.

At Wired’s blog Epicenter Adario Strange notes that the deal makes all other recent advertising firm acquisitions look positively Lilliputian. At Screenwerk, Greg Sterling writes that the transaction is the largest in Microsoft’s history: “Microsoft apparently won a competitive bidding situation (other bidders weren’t disclosed). The consolidation continues . . . and when the dust settles there will only be a small number of very large firms that control 90%+ of all online advertising,” he writes.

So what is aQuantive, and what makes it worth this huge chunk of money? At Geekwatch Blog Mathew Ingram asks if aQuantive “which I had never heard of until this morning” is worth twice as much as Google paid for Doubleclick not too long ago.  

Larry Dignan, writing at Between the Lines  provides a useful history lesson on the company (based on a dossier from Securities and Exchange Commission filings). It ends with the latest results: On May 8 2007  aQuantive reported net income of $14.2 million on revenue of $142.6 million. At TechCrunch Michael Arrington notes that aQuantive is the parent company to Avenue A, Razorfish, Atlas and DRIVEpm. “Microsoft is saying that there is very little overlap between the two companies, the products are highly complementary,” Arrington writes.

So now all the giants have their own advertising firm. We look forward to seeing how these new media and advertising companies will navigate in the world of web 2.0 – and what new firms they’ll add on in the future.

By John Furrier and Tina Magnergard Bjers

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Comments»

1. tamgo - May 18, 2007

Wow! Microsoft has been trying to get deeper into the online media market, but google has shown no signs of letting go of it’s locked grip on it. After the doubleclick purchase, that grip became even tighter.

We all know that Microsoft has the deepest pockets in the planet, but moves like these definitely show desperation from their part.

In the end we should be happy. This will create competition between the big three which will lead to good news for the consumers of this market.

2. gwhiz - May 18, 2007

Why in the world does it make sense for MSFT to own Razorfish? I see a big sacking coming down (or a buyout). I remember a Razorfish RFQ response I was repsonsible for. Those guys didn’t have a CLUE! All design… lookie at the pretty Flash intro.. crud. Agency.com was the same way. Organic less so. Clement Mok and Studio Archetype were hands down Best of Class at the time.

MSFT would do well to shed some of their new asset lest they get comfy cozy in those lava lamp dappled bean bags.

3. Deep Jive Interests » What Microsoft’s Purchase of Aquantive Really Says About Its Future - May 18, 2007

[...] the other hand, while everyone is either contributing to the cacophony about the purchase, or perhaps, remarking about how desperate Google is, or how this [...]

4. gwhiz - May 18, 2007

Factor out Avenue A | Razorfish from this and the multiple is much better than Fred Wilson’s x10 as there’s NO WAY MSFT could sell AA|R for “ten times”. Odd…

5. techherding - May 23, 2007

My experiences (limited, for sure) with the Razorfish bunch were similar, gwhiz. They reminded me of the folks I used to work with just before the dot-bom explosion.

I’m sitting in a MS conference room, trying to hire them as a vendor, and they worked very hard to show me just how dumb I was and how lucky I’d be to get their help. They spent all their time up in the clouds of “strategy” and couldn’t comprehend the simplest tasks that we were asking them to execute. I ended up hiring a couple of freelancers for about 1/3 of the price, and we got just what we needed to meet our objectives.

Observation: They were all dressed in black, and kept reading their mail while we were talking to them.

Sheesh.


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