Report: Microsoft to Buy 24/7

Rumors circulated today that Microsoft  is in talks to buy 24/7 Media , an online advertising and search-engine marketing company.

The New York Post has reported that Microsoft was considering making the purchase for $1 billion. Analysts place the company’s value at about $600 million. The software giant joins WPP Group in the fight for the company, according to the report.

A Microsoft spokesperson would not “comment on rumors and speculation.” And 24/7 Media did not return a request for comment.

24/7 Media is the latest belle of the ball, as Internet companies vie for a piece of the lucrative online advertising market. Announcements of similar acquisitions made by Google and Yahoo have placed additional pressure on Microsoft to step into market before it misses out on the best players.

Google purchased DoubleClick for $3.1 billion last month, while Yahoo said just yesterday it’s acquiring the remaining 80 percent of Right Media for $680 million in cash and stock.

Although the pressure to buy into the market is high, some analysts are treating the rumors with caution.

“This doesn’t really fit their acquisition profile,” Matt Rosoff, an analyst with Directions on Microsoft, told “Microsoft makes two types of acquisitions: Number one are the very large acquisitions to quickly enter a new business; number two is the acquisition of small companies that are privately held — where Microsoft buys a particular piece of technology. And these ad networks don’t fit either category. They’re too big to fit the second. That said, everyone else is doing it.”

Microsoft is definitely keen on the online advertising business, Rosoff continued. “Microsoft is interested in Internet advertising as a major source of revenue over the next 10 years. I think they’d like to turn that into the equivalent of the Windows and Office businesses which are $10 billion a year.”

Microsoft has to make its move soon, say analysts.

“We’re at a pivotal point,” said James McQuivey, vice president of Forrester Research. “It’s no coincidence that Google announced its intent to pick up DoubleClick at a time when video on the Internet was just on the verge of exploding. The $10 billion spent on advertising this year pales in comparison to the $70 billion that will be spent on television this year.

“But if we see television move online in the next five years as we expect, then you’re going to see a big shift of advertising dollars into the Internet to support the delivery of video,” he said.

According to McQuivey, these video-supporting ads have yet to be invented in addition to what is currently available. “We’re talking about video ads. We’re also talking about pre-roll ads, which are 20-second clips that run before a video clip when you go to a Web site to watch a video. There will be banners on the top of the video,” he said.

These ads will be contextually related to the content, requiring new technologies to create and deliver them.

24/7 Media shares are at $11.94 in afternoon trading, up from a Monday close of $9.95.

Get the Free Newsletter!

Subscribe to our newsletter.

Subscribe to Daily Tech Insider for top news, trends & analysis

News Around the Web