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May 19, 2007
How Microsoft Justified the aQuantive Buy
Microsoft used some interesting numbers to justify its $6-billion aQuantive purchase:Ad Age: Don't the valuations seem a bit wild in this interactive space?[via AdAge]
Joe Doran: When we look at this we're looking at the marketplace -- not only the interactive marketplace and saying there's a $40 billion market and lots of ways within the ecosystem that we can add value. We see a $600 billion total advertising market and when we think about convergence of IP-based media consumption and where that's going we see a tremendous ability for us to build the next generation ad platform.
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MS is scrambling to grab a tiny piece of a huge expanding market owned mostly by Google. Sounds like an unintentional ad for GOOG growth. Bizbabble notwithstanding...
don't forget about about "IP-based media consumption," not so coded code for MSFT's geotargeting strategy, which isn't much of a strategy at all. See http://blog.urbanmapping.com/articles/2007/04/25/why-geotargeting-sucks
A $600 billion market, wowzers. But hey, why stop there? Why not look at the $6 TRILLION markets out there?
There's a lot of exciting stuff happening in the developing world, for example. Why doesn't Microsoft buy a bank and start selling mortgages to up-and-coming Asian consumers?
Oh, wait, because they have don't have any proven competence in that area.
Hmm.
Beyond the buzzword bingo justification stuff, the interesting part of the link was how AdAge immediately focused on something agency related: MSFT buying an ad agency is going to scare off a lot of (agency) clients.
Seriously, despite the denials, the MSFT guys are now thinking that they'll get all those AveA clients to start advertising on MSN and Office Live. That's what conflict of interest really is about. It's not very likely to work for the clients.
MSFT could have just paid the agency customers raw cash to advertise... that'd be a lot more efficient and less expensive.
"next generation * platform" = "we have no idea what the * space is about but we're throwing lots of money at it"
good luck with that.
Maybe they're gonna target Pepsi drinkers?
@3:
"IP-based media consumption," is referring to iptv set-top boxes, not ip-geolocation
of course! now i can provide a relevant link to avoid such pitfalls in the future:
http://acronymfinder.com/
Andi remind me again what makes you such an expert?
i love how everyone tries to justify these ridiculous deals until it comes to MSFT. talk abou bias. pure comedy gold.
He was able to squeeze "interactive marketplace," "ecosystem," "add value," "convergence," "next generation," and "platform" into his non-answer. A bullshitter like that is worth his weight in gold.