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November 2, 2009

Microsoft allies with OpenX for third party publisher ad sales

Posted by David Hunter at 12:55 PM ET.

Today Microsoft announced an alliance with OpenX, the vendor of an open source Web ad server and proprietor of a Web advertising market for smaller publishers. The objective is for

… the companies to cross-market and promote products to their respective publisher bases. Under terms of the multiyear agreement, OpenX becomes a preferred partner to publishers for enterprise ad serving solutions. In addition, OpenX will promote Microsoft’s Content Ads monetization products — as well as other products that may be developed in the future — to its existing base of Web publisher customers.

OpenX and Microsoft will each enjoy significant benefits from the partnership. Most notably, Microsoft will have a major distribution channel for its monetization products through OpenX’s community of more than 150,000 Web sites that serve more than 300 billion ads per month. OpenX will, in turn, gain access to a new base of potential customers — via referrals from Microsoft — for its enterprise advertising technology and services.

The Content Ads component of the agreement follows a successful trial Microsoft and OpenX began in August 2008, during which OpenX provided invitations to its publishers to test the product. Content Ads matches ads to relevant editorial content, allowing advertisers to increase campaign effectiveness, which can allow publishers to achieve a higher yield on certain types of inventory. As part of the agreement, OpenX will promote Content Ads in two ways. First, OpenX will integrate Content Ads so that it can be used by publishers who sign up for OpenX Market to better monetize their pages. The company will also build a plug-in to OpenX Ad Server so existing publisher customers can more easily sign up for Content Ads and implement it on their Web site(s). OpenX is the first reseller approved by Microsoft to build a plug-in for Content Ads.

Content Ads is Microsoft’s competitor for Google AdSense and this agreement is an easy way to add ad volume among third party publishers. It is a natural alliance, since big dog Google has their own free in-house competitor for (hosted) OpenX functionality in Google Ad Manager which naturally provides easy serving of Google’s own AdSense ads.

Bigger publishers would probably set their sights higher than either of the above solutions by using Microsoft’s aQuantive products or Google’s DoubleClick. Still the small publisher business is lucrative and not to be disdained – a view that Microsoft only slowly adopted.

Filed under Advertising, Alliances, Coopetition, DoubleClick, Google, MSN, OpenX, aQuantive, adCenter

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August 10, 2009

Microsoft sells Razorfish to Publicis

Posted by David Hunter at 4:57 PM ET.

The rumors of last June that Microsoft was shopping around its Razorfish interactive ad agency that they had acquired with aQuantive were apparently correct as today Microsoft and Publicis announced that the latter is acquiring Razorfish for $530 million:

Steve Ballmer, Microsoft’s Chief Executive Officer, said, "We are grateful for the contributions Razorfish has made to our online advertising business since joining the company as a part of the aQuantive acquisition in 2007, and are pleased that they have found a new long-term home with Publicis Groupe. We look forward to continuing to work with Razorfish as one of our agencies, and we’re confident that as a part of Publicis Groupe, Razorfish will build on its success to date in the digital advertising industry."

There are various theories as to why Microsoft wished to divest themselves of Razorfish, but the "continuing to work with Razorfish as one of our agencies" rings true to me. Microsoft did not want want its ability to sell online ads to all ad agencies to be hindered by owning one themselves. The deal is expected to close in the fourth quarter of 2009.

Filed under Acquisitions, Advertising, Alliances, Coopetition, Microsoft, Publicis Groupe, aQuantive

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June 29, 2009

Microsoft ready to sell Razorfish?

Posted by David Hunter at 11:33 AM ET.

The Financial Times is reporting that Microsoft has retained Morgan Stanley to find a buyer for Razorfish, the online ad agency it picked up when it acquired aQuantive a bit more than 2 years ago. Microsoft is not commenting on the story, but it would make sense since an ad agency is not a great fit for Microsoft’s main Web advertising business which is in the uncomfortable position of courting rival ad agencies. A possible buyer is the French marketing company Publicis Groupe which just last Thursday announced a "broad strategic agreement" with Microsoft.

There had been rumors of an asset swap for Razorfish with ad giant WPP Group in August 2008, but that never panned out and now that two years have passed since the aQuantive acquisition, favorable tax treatment would make an outright sale more likely. It also does not hurt that Microsoft might get $600-$700 million back on the hefty US$6 billion they overpaid for aQuantive.

Filed under Acquisitions, Advertising, Alliances, Coopetition, Financial, General Business, Microsoft, Publicis Groupe, aQuantive

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November 15, 2008

Microsoft claims Live Search cashback success

Posted by David Hunter at 12:18 PM ET.

Last week Microsoft issued a press release touting the success of its Live Search cashback incentive shopping program which was announced in May. Besides the 30 percent increase in the number of product offers available plus new big name retailers participating, there was testimony from reference customers like eBay and ShoeMall about how it had improved their ROI in paid search.

The way this works is that the retailers pay Microsoft a commission for Live Search cashback sales and Microsoft in turn gives cash back to the buyer as an incentive. The incentive would be less than the commission at a normal incentive shopping site, but no one knows what Microsoft is paying. The point is that at least the reference retailers are happy with the return on their commission payments. Since this is effectively CPA advertising as opposed to CPC, it’s hard to see why they wouldn’t be unless hooking into the Live Search cashback infrastructure required a bunch of IT rework.

In any case, if Microsoft wants a incentive shopping site, they have certainly got a big one, but the real game always seemed to be to boost the usage of Live Search and there the results are less clear. To that end, Microsoft touted a comScore study that “in the second quarter of 2008, Microsoft Live Search referred almost 12 percent of total U.S. commercial online transactions and about 13 percent of total U.S. online spending among key retail categories” which still raises some questions.

As Danny Sullivan observes, it is hard to tell what this means without knowing what the percentages were before Live Search cashback, but the reported numbers are only slightly higher than the 10% US search share that comScore regularly gives Microsoft. Not to worry – Microsoft tells Sullivan that the “the immediate goal is to build usage and loyalty.” Somehow we knew that, but it isn’t clear that that is the story the numbers tell. Judgment on that will have to be deferred, but I think it is fair to say that Live Search cashback itself is off to a robust start.

Filed under Advertising, General Business, Live Search, Live Search cashback, Marketing, Microsoft, Windows Live

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