Microsoft Pays Big Money for aQuantive
Microsoft announced Friday that it will join the online ad stampede by purchasing aQuantive for $6 billion in cash, the largest acquisition in the company’s history.
If the deal passes regulatory scrutiny, it will give Microsoft the largest interactive ad agency in the U.S., Avenue A/Razorfish. The deal is expected to close in July.
“The advertising industry is evolving and growing at an incredible pace, moving increasingly toward online and IP-served platforms,” said Microsoft CEO Steve Ballmer in a release. “Today’s announcement represents the next step in evolution of our ad network from our initial investment in MSN, to Windows Live and Office Live, and now to the full capacity of the Internet.”
The purchase of Seattle-based aQuantive also puts Microsoft in the position of being both a buyer of online ad space and a seller of inventory, through its Microsoft sites and search engine. Two-thirds of aQuantive’s revenue comes from Avenue A/Razorfish, which creates Web properties and ad campaigns for big-brand clients such as Ford, best buy and Coors.
In a conference to announce the planned acquisition, Microsoft stressed that it would not be spinning off the agency portion of the purchase. “We bought the company in totality, and from a financial perspective, that’s how we’re looking at it,” said Microsoft CFO Christopher Liddell.
Beside Avenue A/Razorfish, aQuantive also owns the Atlas ad serving platform, which delivers and tracks interactive ads to Web pages. The Atlas ad platform corresponds to the DART technology that Google will be buying with DoubleClick.
“This takes our online ad business to a new level,” Kevin Johnson, president of Microsoft’s platforms and services group. “We are committed to earn a bigger slice of that $40 billion [online advertising] pie that’s growing.”
The 24/7 deal represents the latest consolidation step in the online ad world, touched off last month when Google announced it will buy DoubleClick for $3.1 billion. Soon after, Yahoo! said it would spend $680 million to acquire the 80% stake in Right Media that it did not already control. And last Thursday, WPP Group Plc announced plans to buy 24/7 Real Media for $649 million.
The size of the aQuantive offer suggests the company’s anxiety to make an online ad deal after being aced out of buying DoubleClick by rival Google.
The price tag also lends credence to an unsourced blog report by John Battelle, journalist and chairman of Federated Media Publishing, that Microsoft had offered to match Google’s $3.1 billion bid for DoubleClick and been rebuffed.
