Microsoft aQuires aQuantive Online Advertising for $6 Billion

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Microsoft is acquiring the online advertising powerhouse aQuantive, parent company of Internet & Search Marketing firm Avenue A/Razorfish, for somewhere around $6 billion in cash (largest transaction in the history of Microsoft) in an effort to expand Microsoft’s role in the Internet advertising market and keep up with recent moves by Google and Yahoo.

Google was the first to make its move in the recent online advertising landgrab game, acquiring DoubleClick for a whopping $3.1 billion. Then Yahoo countered with their buyout of online ad exchange Right Media Inc. for $680 million.

Microsoft was in the running for DoubleClick, and had been rumored to be acquiring 24/7 Real Media; but also lost out on that opportunity as 24/7 was acquired by the UK based WPP Group yesterday.

“The advertising industry is evolving and growing at an incredible pace, moving increasingly toward online and IP-served platforms, which dramatically increases the importance of software for this industry,” said Steve Ballmer, chief executive officer of Microsoft. “Today’s announcement 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.”

More on the aQuantive acquisition from the Microsoft Press Release:

The aQuantive acquisition enables Microsoft to strengthen relationships with advertisers, agencies and publishers by enhancing the Company’s world-class advertising platforms and services beyond its current capabilities to serve MSN. The acquisition also provides Microsoft increased depth in building and supporting next generation advertising solutions and environments such as cross media planning, video-on-demand and IPTV. Combining aQuantive’s technologies and services with Microsoft’s portfolio will provide value for the industry’s key constituencies as follows:

  • Advertisers and ad agencies will benefit from a world-class media planning, buying and campaign management solution to drive maximum ROI and optimize their reach to audiences across the increasingly fragmented, interactive media landscape.
  • Media owners/publishers will gain access to best-in-class inventory optimization and monetization solutions across a full suite of rich media, video and targeting capabilities.
  • The broader advertising ecosystem will benefit from the leading interactive advertising agency, Avenue A | Razorfish, continuing to serve its impressive client roster, while also embedding the voice of the marketer into Microsoft’s next generation advertising solutions and services.

Founded in 1997, aQuantive, Inc. (NASDAQ: AQNT) is the parent company of one of the industry’s most successful families of digital marketing service and technology companies, encompassing three primary brands.

  • 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.

“Combining the talented people and deep technology and service expertise of these two companies will help make buying and selling media simpler, smarter and more cost effective for advertisers, agencies and publishers alike,” said Kevin Johnson, president, Platforms and Services Division at Microsoft. “Joining the capabilities of these groups is an important step toward our goal of becoming an industry leading, Internet-wide advertising platform.”

“aQuantive’s mission has been to leverage the power of digital marketing services and technologies to drive measurable results for our clients,” said Brian P. McAndrews, chief executive officer of aQuantive. “Microsoft has set a leading example in prioritizing industry partnership, transparency, measurement and quality, and we look forward to combining forces and bringing the value of our combined assets to bear for the benefit of advertisers, ad agencies and publishers.”

The deal is expected to be completed in the first half of Microsoft’s fiscal year 2008. The acquisition is not expected to have a significant impact on the financial guidance previously issued by the Company.

aQuantive, which has approximately 2600 employees, will continue to operate from its Seattle headquarters as part of Microsoft’s Online Services Business. The combination of Microsoft and aQuantive takes the Company’s advertising platform to the next level in its ability to serve Microsoft’s first party audience assets like MSN, Windows Live, Xbox Live, and Office Live, as well as for third party publishers and applications such as Facebook and Activision game titles.

Loren Baker
Loren Baker is the Founder of SEJ, an Advisor at Alpha Brand Media and runs Foundation Digital, a digital marketing strategy & development agency.
Loren Baker
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  • Deaf Musician

    It’s not so much about acquiring anymore… it’s about what their future plans are with it. Like Yahoo acquired for $6 billion, but now it just redirects to…. Microsoft better get their advertising act together.

  • Domainer’s Gazette

    looks like Microsoft now has their hands on a centralized PPC management platform in Atlas Search (formerly One Point and GoToast).. I wonder how they’ll leverage this app moving forward. Possibly integrate the functionality into AdCenter?

  • Hawaii SEO

    MSN now owns a large SEO Firm…. Hmmm.

    This video might be fun to watch. It was taken last year at the Ave-a Client Summit. Steve Ballmer expresses the importance Microsoft places on. “Advertisers! Advertisers! Advertisers! Baby!” Versus software development.

  • Loren Baker, Editor

    Yeah Dave, Performics is to Google as Atlas Search & Avenue A is to Microsoft ūüôā

    Microsoft, however, seems to have gotten the better group of SEO & SEM companies!

  • Hawaii SEO

    True… Microsoft a better SEO’s out of the deal.

    Do you believe either company will be able to retain their SEO teams or will those business units be sold or shut down?

  • Loren Baker, Editor

    Since Microsoft is such a large company with their hands in almost every aspect of the Internet and computing, I don’t see a public outcry about their acquisition of an SEO/SEM company via their buying of aQuantive.

    Google is a search company at its core and a much larger global dominance of the market, so there is some kind of a difference.

    If aQuantive properties are operated under a different division than Live Search, then there would be a small conflict of interest. But I’m sure the argument will still exist regardless.

  • Hawaii SEO

    Greg Sterling has a good perspective on the news. It looks like an ad platform duopoly.
    (How does Yahoo! compete with these developments?)

    Also… 6 Billion???… Do you believe Aquanitive worth TWICE as much as DoubleClick?

    If you owned stock in either company, MS or AQ, would you buy or sell? Why?