Microsoft Gets Its Online Advertising Company

After missing out on DoubleClick and other high-profile companies, Microsoft finally got its foot in the Internet advertising door by buying aQuantive Inc. for $6 billion in cash.

aQuantive, a digital marketing services company, is heavily involved in creating and tracking Internet advertising campaigns. The company is in a strong growth phase, with reported revenues for the first quarter of 2007 up 55 percent over the previous year, at $142.6 million. The stock price Microsoft paid for aQuantive is approximately 85 percent more than the stock's current value. Seattle-based aQuantive was founded in 1997 and has about 2,600 employees.

Microsoft recently lost out on online advertising company DoubleClick, which Google paid $3.1 billion to acquire. More recently, there have been rumblings that Microsoft had cast its gaze toward content and advertising titan Yahoo, but the purchase of aQuantive likely means that any such deal with Yahoo is dead.

Just yesterday, WPP Group, the world's second-largest ad company, bought online advertising company 24/7 Real Media for $649 million. Microsoft had been rumored in some media reports to be interested in 24/7. And last month, Yahoo bought out the rest of online ad company Right Media, which it had partially owned, for $680 million.

One possible indicator of the importance of the purchase is the fact that Microsoft CEO Steve Ballmer is quoted in the press release. It's very rare for Ballmer or Chairman Bill Gates to comment on news in that way. "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," Ballmer said in the release.

The deal is expected to be completed by the first half of Microsoft's 2008 fiscal year.

About the Author

Keith Ward is the editor in chief of Virtualization & Cloud Review. Follow him on Twitter @VirtReviewKeith.