When Microsoft acquired aQuantive in 2007 for roughly $6 billion – an 85% premium – ostensibly to counter Google’s then-recent purchase of DoubleClick, some wondered whether competitive instincts were clouding judgment. AQuantive consisted of the interactive agency Razorfish, which Microsoft recently sold to Publicis for about $530 million, DrivePM, a performance ad network that Microsoft has now folded into the Microsoft Media Network, and the Atlas Suite of ad server products, which competes with DoubleClick’s DART system and was the principle motivation for the purchase.

In 2008 Microsoft doubled down on ad management tools with its purchase of Rapt, the leading pricing and yield management solution for publishers, which it quickly integrated into the Atlas Publishing Suite. Now sources tell me that Microsoft is no longer taking new customers for Rapt, and its biggest customer, Yahoo!, recently informed analysts that it will be discontinuing its use of the product in favor of internally-developed solutions. Meanwhile, ad operations providers such as Operative, Solbright, and FatTail have closed ranks on pricing and yield management in their ad product suites.

A few weeks ago, Microsoft announced a partnership with open source ad server provider OpenX, an Atlas competitor. The announcement describes an arrangement where OpenX provides a “distribution channel for Microsoft monetization products” (read: ads) and, in return, gains “access to a new base of potential customers – via referrals from Microsoft – for its enterprise advertising technology and services.” Although Microsoft’s director of advertising business development Peter McDonald, commented obliquely that “the OpenX ad server technology might be more appropriate [than Atlas] for certain types of Web publishers,” the partnership nonetheless suggests a migration path for Atlas users should Microsoft decide to exit the ad server business.

Another clue lies in the way Microsoft has evolved its description of PubCenter. In April, Microsoft described PubCenter as “the convergence into a single platform of the many systems we’ve developed and acquired…[including] technologies and tools provided by the former Atlas and Rapt solutions, as well as a self-serve offering.” Today, the PubCenter (beta) site offers “select web site owners the chance to place advertising from the Microsoft network on their web sites.” No word of convergence.

I’ve frequently advised publishers, vendors, and advertisers to be wary of the conflicts created by companies that offer both media campaign management tools and media under the same roof, so Microsoft’s decision to favor its media business over its ad server business might be a wise one. Still, $6 billion was a lot to pay for DoubleClick’s chief rival. And Google, for its part, seems to be well on the way to making its largest acquisition pay dividends.

3 Comments
  1. 20 November 2009 at 8:57 am
    Dan says:

    Interesting post Andrew. Do you see a difference between Microsoft’s media businesss (mostly display, but increasingly search oriented) versus Google’s (mostly search, but increasingly display oriented) vis a vis their ad serving assets and potential conflicts? Thanks

  2. 20 November 2009 at 4:14 pm
    Andrew Frank says:

    Dan,

    Thanks for a great question…clearly there’s symmetry in the way both are moving toward a common “search-display convergence” goal from opposite directions, but two big differences are:
    – search is generating a lot more profit than display, and
    – search isn’t directly competitive with the businesses that publishers and traditional media agencies are in, so creates less conflict around tools.

    A related observation is that search, with its self-service nature, is more aligned with SMBs (Google’s base) while tools like DFP and DFA move Google upmarket toward the enterprise (Microsoft’s base), while Microsoft is moving downmarket with self-service search (having ceded the “premium” search market to Yahoo! in its proposed deal)…so in this sense, Microsoft and Google are invading each others’ base markets, which will need defending.

  3. 22 November 2009 at 11:39 am
    Amit Rahav says:

    Andrew,

    You wrote: “be wary of the conflicts created by companies that offer both media campaign management tools and media under the same roof”

    (I am far from being objective on the matter – http://www.youtube.com/watch?v=yQyBkJNOJFE ).

    3rd party technology, as the name implies, was developed to begin with as a publisher independent tool that can audit publisher data and provide independence from inventory bias.

    the environment is fast changing and these tools require constant investment to drive the efficiency of the buy side. wasting r&d cycles on tying these platforms to one particular inventory does not serve the interest of buy side users.

    The latest innovation from DART is integration to Google Ad Planner. I’d encourage you to try and pull up data on any Google assets using Ad Planner. YouTube, Orkut, google.com or even doubleclick.com. All come up saying ‘data not available’, while data on all of Google’s competitors is freely available. Is DART + AdPlanner really the tool for unbiased recommendation of your next media buy on Yahoo or MSN?

    To be clear, no-one’s questioning any vendor’s data accuracy, and thankfully we have measurement guidelines from the IAB to abide by. But product strategy varies greatly, and is becoming increasingly important.

    @amitrahav

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