14 DAY TRIAL // Apple CEO Steve Jobs recently took a swing at Microsoft's habit of throwing money out the window on investments designed to give it the edge. "I wish developing great products was as easy as writing a check. If so, then Microsoft would have great products," Jobs commented. Microsoft is a notoriously big-spending company, and the acquisition of aQuantive for no less than $6 billion is the latest move aimed at Internet search and advertising giant Google.
Steve Berkowitz, senior vice president of the Redmond company's Online Services Group revealed during a JP Morgan technology conference the fact that aQuantive is not an acquisition as much as it is a merger. "I look at it more as a merger. ... There are certain acquisitions you acquire to look at and say, 'OK great, there's lots of cost synergies, and how are you going to do that.' We look at the aQuantive acquisition as one of revenue opportunity and relationship opportunity. ... We didn't have a strong publisher-facing relationship. ... We have a very strong advertiser connection but we didn't have the tools for the advertisers. So we look aQuantive as an additive, or more of a merger of businesses, and that for us is really exciting, because it's getting us into places we weren't in before," Berkowitz explained, as cited by Seattlepi.
But there's one thing that aQuantive is to Microsoft - aside from the nuances separating an acquisition from a merger - and that's a bet. A $6 billion bet on the online advertising environment. And the size of the pot is quite consistent. Large enough in fact so that Microsoft would even consider a $6 billion acquisition/merger just to catch up with Google.
"Well, first of all, this is a business that isn't going to be a winner-take-all or a one-size-fits-all solution. I also think that this is actually a business that there aren't limited dollars yet, and I think we're a long way away from limited dollars, if there's $500-plus billion dollars of advertising in the world today, both online and offline, and only $20-some-odd billion of it's online." Berkowitz added.
With aQuantive's Atlas platform and Microsoft's adCenter joined at the hip, the Redmond company will have not only advertising tools and services, but also access to a pool of new advertisers, agencies and publishers. Berkowitz is actually planning ahead for when the online ad market will grow to $50, $70, $80 billion in the next three to five years, or even to $150 billion. The potential is there, the pot is huge, and Microsoft just made a $6 billion bet.