Friday, May 18, 2007

Microsoft pays $6B for online ad company

In the advertising world Microsoft is fighting for its life.  Google has far outpaced Microsoft and the advertising area and in the search area.  Yahoo had a vast head start on Microsoft originally as well.  

So Microsoft turned to its war chest and spent $6 million this week just had the ability to display banner ads.  That may seem counterintuitive as the age of banner ads has long since passed, however Microsoft has big hopes for banner ads with its portable devices and especially with the Xbox. 

aQuantive was definitely in the right spot at the right time and received a hefty premium for their company. That price tag is probably $3-$5 billion over what the company is actually worth. But Microsoft needs to purchase momentum and if that means shelling out extra money, providing the executives with their own private jets or providing engraved pens capable of writing in 24k gold ink, then that is what they're going to do.

aQuantive's technology will allow Microsoft to deliver ads to third-party Web sites, something that should mesh with Microsoft's existing plans for delivering ads onto other platforms such as video games on its XBox, which connects to the Internet. Microsoft currently delivers ads mostly to its own Web sites, such as MSN.

aQuantive also has a significant interactive advertising agency called Avenue A / Razorfish, which buys, sells and creates online advertising - much like a traditional advertising agency, but online.

Source: Microsoft pays $6B for online ad company

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