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Microsoft’s smart preemptive tactic by buying aQuantive for $6 billion

MicrosoftIn what’s termed to be a direct response to Google’s acquisition of DoubleClick for $3.1 billion, Microsoft’s purchase of aQuantive for $6 billion is coined by industry experts as a very smart move.

The Microsoft-aQuantive deal, which is the largest deal in the advertising industry, is indeed a desparate attempt to match Google’s advertising muscle and perhaps to recoup their failure in their earlier multi-million dollar bid for DoubleClick. Microsoft offered $66.50 per share for aQuantive, an 85% premium to its closing price on Thursday.

Kevin Johnson, president of Microsoft’s platform and services division, said: “It is a big bet on advertising monetisation for the long-term growth of the company and this is a significant step forward.” He said the online advertising market would be worth $40bn this year and was growing at 20 per cent a year. – MSNBC

aQuantive, of Seattle, has about 2,600 employees, and reported 2006 profit of $54 million on sales of $442.2 million. aQuantive brings Microsoft technology and services, but not the much needed half a million advertisers and traffic network to Microsoft. – VentureBeat

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UPDATES

2007 20th May:

Washing Post have an article which pins the strategy of Microsoft’s $6 billion purchase of aQuantive and calls it a core moneymaking strategy of the digital economy – watching you.

The Internet’s high-stakes advertising derby shifted into overdrive during the past month as four of the industry’s behind-the-scenes players (Google Inc., Microsoft Corp. and Yahoo Inc. – and WPP Group PLC) agreed to takeovers. The deals’ combined price totaled $10.4 billion, exceeding the total amount of money spent on Internet ads just three years ago. Read the article in Details.

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