Report: Microsoft in talks about Avenue A sale

To some, Microsoft running an ad agency makes about as much sense as eBay placing phone calls over the Internet. But the companies in fact operate in those far-flung business lines, the seeming illogic of which is cause for regular rumors of deal talks that would spin off the appendages.

We hear periodically of eBay in talks with Google about a Skype sale, and, for Microsoft and its ad agency Avenue A / Razorfish, the latest comes courtesy of Advertising Age, which reported over the weekend that deal talks between Redmond and the agency holding company WPP have resumed.

Microsoft picked up Avenue A through its $6 billion purchase of aQuantive last year. That acquisition brought into Microsoft’s fold aQuantive’s Atlas technology and the DrivePM ad network, but many people at the time questioned the wisdom of the software giant running an interactive agency. The price tag also seemed a little steep, particularly given that it was nearly twice as much as Google had paid for aQuantive-rival DoubleClick weeks earlier, a company that Microsoft had actively pursued.

The reported deal would see Microsoft spin off the agency to WPP in exchange for cash and the ad-serving technology of 24/7 Real Media, which WPP acquired last May.

Microsoft did not immediately offer a comment on the reported talks with WPP, but the company has previously explained to me that they make a conscious policy of operating the agency at arm’s length. That approach is due in part to the potential conflict of interest that could arise from the work that Avenue A does with competitors to Microsoft (similar to Google recently unloading the SEM portion of DoubleClick to WPP rival Publicis Groupe), and part, I suspect, because Microsoft really doesn’t have an interest in running an ad agency.