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Advertising - Friday, May 18, 2007

Opinion Roundup on MSFT/AQNT

Zenrob

"This deal basically completes the elimination of independent ad-serving technologies with any market share. Ad serving on the Internet is now controlled by Microsoft (Atlas), Google (Dart) and AOL (Ad-Tech)."
Technofile Europe

"Watch the regulatory horse trading now...Microsoft will argue that Google and DoubleClick stifles competition while Microsoft’s aQuantive buy stimulates it. I don’t get the argument to be honest. Online advertising is being consolidated among three giants–Google, Yahoo and Microsoft. My bet: Microsoft eventually shuts up about Google so it doesn’t raise concerns about the aQuantive deal."
Between The Lines

"The best investing move ever, not selling my holdings in aQuantive yesterday. This is a true story: yesterday my holdings in AQNT crossed the 50% gain threshold, and having become more disciplined, I logged in a couple of times into my online trading account and considered selling my shares. I’ve bought, sold, bought, sold and bought this stock again many times, I’ve written its praises on this blog quite a bit. Having worked in ad sales, as a VP of sales for a publisher, I thought it was the best company in the space. Naturally when Google bought Doubleclick for $3.1B, I knew the timing would come when someone would snatch it up. But yesterday as WPP bought 24/7 Realmedia, I thought, maybe MSFT will balk at AQNT’s valuation - $2.6B as of yesterday - and make a run for Valueclick. Or, maybe it won’t move. Last week AQNT rose $3 and I thought, maybe I should just lock in my 50% gains and move on. Today I wake up, and AQNT is up $27!
HipMojo

"With headquarters both in Seattle, these partners likely know each other well from the tightly woven Seattle networking community so there is likely a known cultural fit. It is likely clearly friendly due to this and how quickly it came together so quickly after losing the bidding for 24/7 real media. The major question is can Microsoft quickly integrate and leverage these systems with its’ own, some of which have overlap and the graphical side. The other risk is can Microsoft tie up the critical thought leadership staff in an appealing way that maintains the creative culture? Time will tell."
David Dalka

"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."
This site is dead

"The big challenge is figuring out how to efficiently spend all of those brand dollars, half of which have traditionally been wasted. The big players have acquired the assets they need. Now comes the hard part."
Publishing 2.0

"I think this shows one more thing – talks of Microsoft buying out Yahoo at Yahoo’s terms goes down and this move could potentially put more pressure on Yahoo. "
Sadogopan's Weblog

"I believe, old media will be a huge beneficiary of the online advertising trend, as they learn to reinvent themselves. With Rupert Murdoch playing the role of the industry pioneer - alert and willing to learn, open to new ideas and experiments, and gutsy enough to make bold moves, the industry even has a torchbearer who shows the way."
Sramana Mitra

"The problem is that simple banner serving is no longer special. Service is what distinguishes and special features above the standard. Having built one specialized banner server already, and now building another system I would call a solution rather than a server, I can tell you that building your own can make sense in many cases... And this is where the space will likely be moving in the future. We need APIs more than ever in this space as there will be more small systems, specialized for the portals they are used on, as well as some big players with lots of power behind them. We need a real market place not created for making money but for facilitating performance."
Oliver Thylman's Thoughts

"Good thing the visionaries at Microsoft did not see this trend developing in 2003 when the stock was FIVE dollars. Forget me missing this, I am just a stock guy. How do the bankers, analysts and geniuses at Microsoft miss this NOW CRUCIAL (?) purchase when they could have owned this for a $100 million. Assanine and another reason to avoid Microsoft. You can’t be a follower and than just overpay as well. It’s like a spoiled, panicked youngster is running Microsoft."
Howard Lindzon

While old media continues to slow dance (think News Corp / Dow Jones and Thompson / Reuters), new media is turning into a mosh pit at an AC/DC concert."
Brad Feld

"If anyone needed proof that the online ad business is in the middle of a bubble of valuations, this is an excellent data point. Blackfriars' survey of US businesses says that senior executives in US companies plan to spend less on marketing and advertising this year than in any quarter in the last three. With that as a backdrop, it will take Microsoft more than a decade to recoup the $6 billion it is investing in aQuantive, if ever. And with Microsoft already tapping deferred revenue assets to deliver numbers that Wall Street likes, throwing billions more at opportunities like this isn't going to help its stagnant stock price."
Blackfriars

"Seattle-based quasi-venture firm Second Avenue Partners is a stockholder, standing to make $290m on the deal."
Pauk Kedrosky

An internal email sent to Microsoft employees suggests that the deal will help Microsoft go beyond online advertising to in-game and web-TV. An extract:

"Our commitment is to capture our share of both the $40 billion online ad opportunity and the larger $600 billion ad market, which includes TV and gaming, and is rapidly shifting to the world of online and IP-served platforms. "
PSFK

"Microsoft finally upstages Google. Congratulations, Microsoft (MSFT) . You’ve finally joined the world of online advertising.But fortunately for Mister Softee, all it had to do was venture out in its own backyard to find a company that instantly catapults it into a leadership position in the online ad business. Microsoft’s $6 billion offer for Seattle-based aQuantive (AQNT) is a brilliant move for the company."
Paul LaMonica/CNN Money

'At 2% of Microsoft's market value, the acquisition is still a tuck-in, but it's the biggest one in Microsoft's history. aQuantive won't solve all of Microsoft's web problems, but it will solve some of them. Most importantly, it will mean that Microsoft's web business must--at least temporarily--be taken seriously again."
Internet Outsider

"At least the big players are overpaying in a market that I think we can all agree is one that is just at its most early stages. Here’s why: Spending by big advertisers online lags well behind what many call “audience engagement.” In other words, time spent on the Web has obviously been growing and taking share away from traditional media. But spending online, though fast growing at about $20 billion this year, has not kept the same pace."
Boomtown

aQuantive investors, executives and employees should be happy with an 85 percent premium. The big holders of stock include:

+ T. Rowe Price Associates -- 10.1 percent ownership.
+ FMR -- 8.3 percent ownership.
+ Mazama Capital Management -- 7.4 percent ownership.
+ Second Avenue Partners' Nicolas Hanauer -- 5.6 percent ownership.
+ aQuantive CEO Brian McAndrews -- 2.9 percent ownership.
+ aQuantive Chief Strategy Officer Michael Galgon -- 1.2 percent ownership.

That means that Seattle venture capitalist Hanauer -- who was also one of the earliest investors in Amazon.com -- could take home a whopping $290 million if the deal is approved. Meanwhile, McAndrews is poised to make $152 million and Galgon is sitting on about $62 million worth of aQuantive stock.
Seattle PI