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.