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May 18, 2007
Microsoft Bets Big, Pays $6B for aQuantive

At long last, Microsoft has made a big ad world acquisition, announcing that it has agreed to acquire aQuantive, the parent of Avenue A | Razorfish, in a $6 billion cash deal.

"It is a big bet on advertising monetization for the long-term growth of the company and this is a significant step forward," Kevin Johnson, president of Microsoft's Platforms and Services Division, said during a conference after the deal was announced.

Microsoft's move comes in the wake of recent mega-deals for the online ad industry. Yesterday, WPP landed 24/7 Real Media in a $649 million deal. AOL went on a buying spree, picking up Third Screen Media and ADTECH AG this week. And last month, Google paid $3.1 billion for DoubleClick.

"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, CEO 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."

Forrester analyst Shar VanBoskirk blogged that the acquisition is a sign of a mature online marketing industry. 

"The shift to online marketing has at last begun," VanBoskirk wrote. "We in the industry have been talking about the shift away from traditional media into online for the last 10 years. But the medium took time to establish its credibility. I think the intensity and price tags of these acquisitions indicates that some very big media and agency firms are staking their bets on online. They've watched the success of Google with search, and want to be in front of the next huge shift of budget into online advertising."

As for marketers, Dana Ghavami CEO, CheckM8 Inc., said the deal could be a mixed blessing.

"On the one hand this is great news for marketers being that fewer purchasing points to larger amounts of inventory makes it easier for media buying," Ghavami said. "On the other hand, it presents a major conflict of interest being that an agency or ad platform owned by a media company is going to be greatly questioned in its fair allocation of a media budget that includes their own properties."

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