RealTime IT News

Microsoft Adds Its Own Ad Exchange

Microsoft wants a major piece of online advertising and it's willing to pay to get it.

Today, the company announced it bought advertising exchange platform company AdECN, adding to its growing portfolio of online advertising businesses. Financial terms of the deal were not disclosed.

Microsoft said AdECN’s technology serves as a hub for advertising networks to come together in a neutral, real-time auction marketplace for buying and selling display advertising, a spokesman told internetnews.com in an e-mail.

“We believe the addition of AdECN to the Microsoft portfolio is a perfect fit and will create more efficiency for the industry by forming a more robust marketplace between advertisers and publishers, aggregating more supply and demand," Microsoft Platforms and Services Division president Kevin Johnson said in a statement. "This is good for the whole advertising industry."

Microsoft said the buy is a key component of Microsoft’s strategy to develop a comprehensive search and display advertising platform enabling advertisers and publishers to maximize return on investment (ROI) on their digital advertising investments.

Earlier this month, Microsoft's last online advertising buy, aQuantive, finally gained clearance from the federal trade commission. Microsoft agreed to acquire aQuantive for $6 billion in cash in May.

aQuantive has seen significant growth in the decade since its inception, evolving to include three main brands: Atlas, which makes the Media Console advertising platform; DRIVEpm, which provides ad services that match advertiser campaigns with publisher inventory; and Avenue A | Razorfish, which, as one of the largest online ad agencies in the world, provides advertisers digital marketing consultation along with media planning and buying.

Jupiter Research analyst Emily Riley told internetnews.com the AdECN platform model will help Microsoft attract the direct response and mid-size advertisers and smaller publishers who go un-targeted by DRIVEpm, the network Microsoft purchased with aQuantive.

Yahoo beat Microsoft to the online advertising exchange market when it purchased 20 percent of the Right Media Exchange in November 2005. In April Yahoo announced its intention to acquire the remaining 80 percent of Right Media it didn't already own for approximately $680 million in cash and stock.

New Yahoo president Susan Decker has made it clear the open exchange model is central to Yahoo's future.

Microsoft expects the AdECN acquisition to close in the first half of Microsoft’s fiscal year 2008. It said that AdECN, which has approximately 30 employees, will continue to operate from its headquarters near Santa Barbara, Calif., as part of Microsoft’s Online Services Business.

In related news, Microsoft today announced the creation of the Internet Services Research Center (ISRC).

Microsoft said the center will be dedicated to accelerating innovations in search and ad technologies and delivering them more rapidly to advertisers and customers.

The new group will be a part of Microsoft Research, and the team will work closely with MSN and other product groups across the company.