Microsoft sheds digital ad arm

Natalie Apostolou
telecomasia.net

Microsoft has finally shed the assets of its global interactive agency Razorfish to Publicis for $530 million.

The sale ends a year long divestiture saga for Microsoft which inherited the advertising agency as part of the $6 billion acquisition of Aquantive in 2007.

Razorfish has around 2,000 staff globally, a number which will most likely be radically trimmed once part of the Publicis group.

A number of global ad agencies were vying for the asset, and Japan’s Dentsu’s offered a reportedly higher bid of around $700 million. But Microsoft opted for Publicis due to a clever strategic tie-up with Publicis’ roster of clients.

The clients, which include Coca-Cola and HP, which will be buying millions of dollars worth of ads across Microsoft’s Bing and MSN platforms.

Under the transaction Microsoft and Publicis have signed a strategic alliance agreement, in which Publicis clients will buy display and Bing advertising from Microsoft over the five-year term of the agreement, in sympathetic terms.

The deal also expands the Microsoft-Publicis deal executed in June to collaborate on TV ads.

Publicis CEO Maurice Levy said, “we are paying between 1.4 and 1.5 times sales, which in the digital world is reasonable.”

Razorfish has revenues of about $400 million in 2008. Razorfish will also continue to be a “preferred provider” to Microsoft for digital marketing services with Microsoft committing on a yearly minimum marketing spend.

Microsoft may now look at selling other non core digital assets such as struggling in-game advertising gaming platform Massive Inc.  

Massive was acquired by Microsoft for $280 million and recently reduced staff by one third due to the pause in the in-gaming ad sector.

 

Commentary

5G and data center-friendly network architectures

Matt Walker / MTN Consulting

Webscale and transmission network operators' interests are aligning as the 5G era dawns

Matt Walker / MTN Consulting

Webscale and transmission network operators' interests are aligning as the 5G era dawns

Rémy Pascal / Analysys Mason

The launch of 5G by South Korean operators serves as a first benchmark for other operators around the world