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AD AGE MAIN 05-21-07 a 50,51 ADAGE.Qxd AD AGE MAIN 05-21-07 A 50,51 ADAGE 5/19/2007 4:18 PM Page 1 50 | May 21, 2007 | Advertising Age DATACENTER: WHAT’S THE DEAL? Facebook and platforms such as the do-it-yourself ad solution Spot Microsoft Digital deals have inflated prices of internet marketing plays to bubble-bursting How the nets are Runner. A day before the aQuan- From Page 1 levels, meaning aQuantive commands nearly the same price tag as Chrysler— tive deal, WPP Group, home of doing with digital the technological flux sweeping the and a higher value than ad giant Interpublic. AQuantive’s stock has soared JWT and Ogilvy & Mather, said it media world could be forced to con- 11,366% since April ’01. Microsoft’s stock gain since then: just 6%. would pay $650 million for 24/7 NBC sider competition from a whole new Real Media, an ad-serving platform. WHAT BUYERS LIKE: Social set of players. Players that have that RELATIVE VALUES WHAT IT BUYS WHAT IT GETS As once-clear divides break networking on broadband player; very stuff in their DNA, who know, $6 AQuantive No. 1 digital agency and world’s ninth-largest down, new conflicts come into B voting to select next “Heroes” for instance, that understanding (buyer: Microsoft) marketing organization. AQuantive’s revenue play, not least the issues posed by character; virtual magazine for how to manipulate a company’s per employee ($262,000) beats Microsoft’s scenarios in which media buyers ($166,000 in ’06). search-engine results is becoming as and sellers reside within the same “Lipstick Jungle”; mini-sodes for “Bee Movie” starring Jerry Seinfeld. important, if not more so, than scat- $7.4 Chrysler Group An 80% stake in Detroit’s No. 3 automaker, company. In buying aQuantive B WHAT THEY DON’T: Online soap tershooting ads across mass media. (buyer: Cerberus) plus a massive debt: $18 billion in outstanding and its Avenue A/Razorfish unit, Industry observers who expected pension and health liabilities. Microsoft is getting a major buyer “Coastal Dreams”; 1,000 hours of the deal were shocked it didn’t in- of internet ads, a company that broadband Olympics content. $5B Dow Jones Slow-growing newspaper publisher with power- BOTTOM LINE: “A very good job of clude an announcement that Mi- (suitor: News Corp.) ful brand and growing digital play. spends heavily with some of its crosoft would somehow offload Av- biggest rivals, like Google. So while integrating multiplatform while enue A with a spinoff or a sale. While the door has swung open for a new talking about their new programs,” said Rob D’Asaro of OMD Digital. insiders seemed convinced it would MULTIPLES PRICE model, a huge question is whether divest the business, Microsoft was it also opens a Pandora’s box of reg- public and definitive in denying AQuantive $6B (13.6 x ’06 rev., 10 x ’07 Microsoft will have $22B cash ulatory issues and conflicts. ABC there were any such plans. On the (Microsoft) rev., 88 x ’07 net income) after the deal. Microsoft’s Mr. Doran acknowl- WHAT BUYERS LIKE: New “pause contrary, a Microsoft executive em- DoubleClick $3.1B (10 x est. ’06 revenue) Google will have $9B cash after edged the conflict issue. “We want to ad” feature on broadband player; phasized that Avenue A’s capabili- (Google) the deal. make sure all ad agencies under- deal with Cox to disable fast forward ties actually sweetened the deal. stand we don’t want that to become a for video-on-demand ads. “When we think about them Digitas $1.3B (3.3 x ’06 revenue) Deal closed in January as center- reality,” he said. “We’ll operate Av- WHAT THEY DON’T: No being the leading provider of in- (Publicis) piece of Maurice Levy’s digital enue A/Razorfish at arms’ length, strategy. impressions guarantees; TV-first teractive services we look at that make sure they have ability to drive approach to content distribution. asset much like aQuantive did,” 24/7 Real Media $649M (3.2 x ’06 revenue) Since its founding, 24/7 made the value for marketers and adver- BOTTOM LINE: “Highest-quality said Joe Doran, general manager of (WPP) money only one year ($38,000 in tisers and remain independent.” viewing experience, but you’re one ’05). Loss to date: $1.1B. Microsoft Digital Advertising So- While it’s unclear just how of 30 advertisers,” said Adam lutions. “Having that as part of our much a part of its strategy market- Reuters $17B (3.6 x ’06 revenue) Market gives a higher multiple to Kasper, senior VP-director of digital portfolio will help us embed the (Thomson) digital-based databases/informa- ing services will be, Microsoft’s media for Media Contacts. voice of the marketer and make tion (Reuters) than to newspa- move is sure to once again kick up sure we’re driving the innovation pers (Dow, 2.8 x ’06 revenue). speculation about interveners. In CBS that meets the needs of the mar- the past decade, companies as di- keter.” Interpublic Group Current (0.9 x ’06 revenue) Perennial turnaround play isn’t on verse as CAA, IBM and McKinsey WHAT BUYERS LIKE: Quincy market the block, but contrarians take Avenue A/Razorfish, whose have made inroads into major mar- Smith plugging CBS Interactive; Joost cap: note: For less than the price of sponsorship; interactive channels for client list includes Ford Motor Co., $5.5B aQuantive, Interpublic offers 10 keters’ budgets, but none have Kraft Foods, Visa, JPMorgan Chase times the revenue (including digi- pried loose the holding companies’ each show; JoAnn Ross avatar. and, of course, Microsoft, is the tal gem R/GA). grip on the CMO wallet. Whether WHAT THEY DON’T: Disconnect largest buyer of web media and paid Microsoft or Google, which is said between digital and programming. search, is highly touted for its web- Sources: Ad Age DataCenter analysis, companies, Bloomberg to be forming its own in-house BOTTOM LINE: “[Mr. Smith is] a site design and is far from an after- agency, fare any better remains to digital-innovation shot in the arm thought, even though it’s clear the DDB. “If you look at a trend to- For years now, the major ad be seen, but developments like the that CBS needs,” said Tracy real prize is the ad-serving capabili- ward greater scale, automation and players have been scooping up com- aQuantive deal are bound to Scheppach, senior VP-director of ties of aQuantive. At least in theory, centralization toward a platform panies that create banner ads and heighten speculation on just how video innovations at Starcom USA. it gives Microsoft soup-to-nuts in- approach to marketing, like Google web video, craft social networks and the agency landscape will change teractive-marketing capabilities. AdWords and Spot Runner, then communicate with bloggers. But re- with all this media flux, especially CW “A company could, in essence, they’re doing the right thing with cently the deal-making has taken on with the tech players’ massive WHAT BUYERS LIKE: Site for outsource its entire marketing to an end-to-end marketing solution a different color. Interpublic, which market capitalization. “Gossip Girl”; social networking. Microsoft,” said Matt Freeman, that has infrastructure and plat- has less cash to spend, has been tak- WPPoogle, anyone? WHAT THEY DON’T: YouTube- CEO of Omnicom Group’s Tribal form and commerce all built in.” ing stakes in media plays such as CONTRIBUTING: ABBEY KLAASSEN highlight show “Online Nation”; lack of guaranteed audience for web. BOTTOM LINE: “I’ve never seen US. “Google and Microsoft believe “We see a $600 billion total ad- ad server gives them a user base,” how a show can be fleshed out they are battling for the future ad- vertising market, and when we said Gaston Legorburu, chief cre- across all screens the way they did AQuantive vertising industry, that everything think about convergence of IP- ative officer at Sapient, the second- with ‘Gossip Girl,’” said John Swift, From Page 1 will start to be funneled through based media consumption and largest digital agency, according to managing director of PHD. lost the DoubleClick bidding to these types of systems and more where that’s going, we see a Ad Age’s recent rankings. Sapient Google it was forced to pay almost and more they will capture bigger tremendous ability for us to build has its own agency ad-serving FOX twice as much for the secondary shares of the industry.” the next-generation ad platform,” product, and has kicked around in- player in the ad-serving market. Atlas gives Microsoft a technol- Mr. Doran said. “It’s a big strategic ternally whether or not to market WHAT BUYERS LIKE: MySpace as Ad serving is integral technolo- ogy footprint into agencies and move for our company.” it to other agencies, given the re- springboard for viral campaigns; gy for both agencies and publish- publishers. It plans to use Atlas, in cent activity in the space. enhanced broadband player; ers. It helps agencies monitor the conjunction with DrivePM, to cre- KEY REVENUE GENERATOR The big question is what Mi- leadership in joint venture with NBC; progress of campaigns and consoli- ate an ad network. As audiences for Finally, advertising is expected to crosoft does with the agency (see cornering mobile market with Jamba. date the reporting in one place. It portals such as MSN have for the be a key revenue generator for Mi- story). Some suggest Atlas and WHAT THEY DON’T: Late to social- also helps publishers decide which most part leveled off, a network is a crosoft’s growing online software DrivePM are both tied to Avenue networking party; few examples of ads to place where and when in or- natural way to extend that reach and services division.
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