Business Channel 2007-05-28&30

Oliver, there was a strong market reaction when Microsoft announced it was buying aQuantive, what's behind this deal?

Well, I think Microsoft knows it needs to get into the advertising 1 business. For years, it's basically made money one way, which is selling package software. But the future is the Internet and a huge chunk 2 of the Internet is supported by advertising. So Microsoft is trying to buy their way into the competition.

So you think the 6 billion dollars is a decent price tag for this company. It's an 85% premium 3 at what the stock was trading till the day before the deal was announced. Is that really justified 4?

I am gonna say, I am gonna say that is justified and I'm not, that doesn't necessarily mean that this will, this is bad. It's a big gamble. Let's go down the road five years, there are going to be a limited number, let's call it, 3 major market places for, for , you know, for ads spending. Already, people are buying and selling ads as though there were bonds or stocks, digitally, in front of dashboards. The two martini lunch at Madison Avenue is gone, replaced by the exchange, so why you pay six billion for aQuantive, is / if you think that that can be the beginning, the embryo 5 of an exchange down the line.

Another question that's been raised is did they buy the right thing. Some people say the real future is in the exchanges, as you, as you, as you indicate, um, that they should really be competing with Yahoo's Panama, and Google's Ad Sense, does this deal give them the power to compete on that level?

I think it's an interesting question. You are absolutely right. What they bought is a, essentially 6 a large ad agency, OK, but it's the, it is maybe the, the very end of the old-style ad agency. It may be that because they have a lot of relationships, they have both buyers and sellers, they have relationships with publishers, and they have relationships with, um, you know, advertisers that they can actually kind of insert an exchange and just, because they've got both sides of the equation, that's probably what they are gambling 7 on. I mean I think that the exchange is a big piece of the puzzle.

If it does work out the way that Microsoft hopes and plans it to, how's that can affect the way that advertising is delivered to consumers in, in the long run?

The, the future is, ads that are increasingly targeted to you, you know, they are targeted to you by the minute, by the particular interest that you are displaying at that, at that moment. You know, it, it may be that as we are driving along in our cars, we'll have a GPS driven ad thing, flipping 8 ads at us as we listen to music, you know.

If you lived here, you would be home by now.

Yeah, yeah, this house is now costs, you know.

Yeah, just good toke right up to zero.

Down 10% since you last drove by.

Um, but all of those ads are going to be bought and sold, you know, we hope by humans, but they may actually get bought and sold by algorithms, I mean there may be bonds, who are optimizing 9 ad buys, you know, in very sophisticated ways on these exchanges.

The best of both worlds, robots and advertising.

Exactly right.

NOTES:

1. aQuantive

aQuantive, Inc. is a digital marketing 10 company focused on helping 11 online advertisers reap the greatest rewards from their marketing efforts. The company divides its business along three business lines: Digital Marketing Services, Digital Marketing Technologies, and Digital Performance Media.

2.algorithm

TD technical a set of instructions that are followed in a fixed order and used for solving a mathematical problem, making a computer program etc