You know how Google beat out Microsoft with a $3.1 billion bid for online advertising company DoubleClick? Yeah, Microsoft don't need to stinkin' DoubleClick. They went out and spent $6 billion this morning on their own advertising company (that you've never heard of), aQuantive. According to Michael Arrington over at TechCrunch, aQuantive's revenues for 2006 were $442 million, and the company's net income was about $54 million, which leads to the obvious question: couldn't Microsoft have found a cheaper advertising company to acquire? Sure, everybody wants to pick up an advertising company these days so it can be integrated into your search engine/online portal's business model. But $6 billion is a lot of dough.
In fact, Microsoft paid about $66 per share, which was twice the trading price. Odds are there was a bidding war and the company didn't want to lose another one of those.
Reader Comments (Page 1 of 1)
5-19-2007 @ 9:13PM
Scott said...
Brad, with all due respect, your "obvious" question is obvious only to those who don't understand the significance of the purchase. "...leads to the obvious question: couldn't Microsoft have found a cheaper advertising company to acquire?"
First of all, Aquantive is not an advertising company; it is a holding company that owns several of the largest advertising & digital media properties. Secondly, of course they could have bought some smaller, "cheaper" companies... if they just wanted to play catch-up, which is a losing strategy for any major corporation.
By purchasing Aquantive, Microsoft now owns the largest buyer of digital media. Through one of Aquantive's subsidiaries, Microsoft now has a window (pardon the pun) into advertising across the entire web--including on Yahoo & Google. That's HUGE.
This is Microsoft's biggest purchase ever, and it puts them in a position to truly compete with Google in the advertising business. Just like Google, Apple, Yahoo, etc., Microsoft doesn't want to just be "one of the biggest," they want to be THE biggest, so paying a premium to put them in that position is worth every dollar.
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5-19-2007 @ 9:14PM
mike said...
It's all relative...Google paid 3.1 billion for Doubleclick who had less than half the revenue (150mm), just one of the assets and about half the employees (1500 vs 2600).
Yes, they were both expensive, but you could argue Google, who needs a jumpstart less, is the one who overpaid....
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5-19-2007 @ 9:14PM
lev polvoi said...
Rather expensive, but i guess that if you want to be the best, than you have to put some effort/money into the marketplace and thats just what Microsoft had done.
Now they have a chance of getting "Google" sized on the advertising industry.
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5-20-2007 @ 10:58AM
Jason said...
i knew there was a reason why Microsoft skipped Doubleclick....
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