MSFT to Acquire AQNT - Seattle Roars back

According to Marketwatch this morning, Microsoft is acquiring Aquantive.

Doubtless this deal is directly linked to the DoubleClick aquisition by Google, and it continues the battles between Mountain View and Redmond. With the announcement of 24/7 heading into the hands of WPP, this leaves only a few standing - Accipiter? Zedo?

There are two ways of looking at this frenzy - First, with search highly optimized and relatively stable around the majors, marketing money is searching for a home and display advertising is certainly the largest spend that is still open for competition. With a predicted continuing influx of brand dollars into interactive, owning a greater share of the spend is a good growth bet.

The other side, however, is even more interesting.

What this is also a likely sign of is the maturation of the online media market from a real estate perspective.  For over ten years, there has always been limitless "frontier" of available marketing real estate, and we have finally colonized the last bit of land on the Pacific Coast.

The value of a good display ad network is not the technology (a team of quality engineers could relatively quickly).  It is the network.  Aquantive and Doubleclick have enormous numbers of impressions per month (DCLK is 6B/month).  The tags that drive this traffic are the value.  They are the real estate.  Just getting the tags on the sites took almost ten years.

As recently as a few years ago, it was not unreasonable to start up a new ad serving technology.  Falk AG, Zedo, and others were successful with pricing and technology strategies that drove demand. But this was because there was still new real estate that had not been exploited.

These days, the combination of ad networks like Blue Lithium and Federated Media (and many others) plus the publisher networks have opened up some new real estate in the long tail of small web sites and blogs, but the mainstream of traffic is already represented, and new, large sites like YouTube are rare.

I am glad to see Redmond in the game.  It is a hard business, and the question of what to do with Avenue A/Razorfish dwarfs the prior speculation about what Google should do with the Performics division of DoubleClick.  But strong product development will likely give a real boost to Aquantive's platform and that should benefit advertisers.

Comments

[Bob Page]

Your point about taking 10 years to tag the sites is a critical one.

BTW, Accipiter isn't free-standing -- in December they were swallowed by Atlas (aQuantive)!

[Nick Olsson]

The growing reach / power of the ad networks begs a question - how do media companies keep control of their own real estate to take a fair share of interactive spend, maintain their brands and make sure readers see relevant display ads?

One option is pricing and monetization software (www.rapt.com) that's used by Dow Jones, MTV Networks, NBC, iVillage and yes, MSN and Yahoo!.