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 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 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.

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