- Brian Morrissey

PHOENIX As Microsoft executive Brian McAndrews sees the digital ad business, there is room for only two players to provide the array of services and tools advertisers and publishers need to manage complexity: Google and Microsoft.
 
"You don't need more than two," the president of Microsoft's publisher and advertiser solutions unit told attendees here for the Interactive Advertising Bureau's Ecosystem 2.0 conference.
 
McAndrews, the former CEO of aQuantive, laid out the blueprint for Microsoft's ad platform that it hopes will serve advertisers and publishers of all sizes. For some, like Viacom, Microsoft will handle everything from ad serving, search, targeting and all non-premium sales. For other publishers, it will only serve ads or handle remnant inventory through its ad exchange.
 
"We want to be flexible and a la carte," he said in a later interview here.
 
That doesn't mean there isn't room for other players, McAndrews stressed. Publishers like AOL and even Yahoo! on its own will provide pieces of the platform, but they will be unable to invest in the technology needed to offer all parts, he predicted.
 
"I'm not saying Yahoo! and AOL go away," he said. "They'll offer pieces of the ecosystem but not all of it. There's only two players who can definitely do all of it.
 
"Do they have the money to sustain the same amount of investment as Microsoft and Google?" he asked of Yahoo!. "I question that."
 
Microsoft believes its $44.6 billion bid for Yahoo! will shore up its business in a key area: search, where the two companies are a distant second and third to Google. Without joining forces, and with Google acquiring DoubleClick, the industry risks having only one dominant player, McAndrews warned.
 
Yahoo! executives earlier laid out their plan to build a platform to make it easier for buyers and sellers of online advertising to interact. It hopes to use its position as the Web's largest publisher to open up its inventory for other publishers to extend ad buys off their sites. As for the Microsoft argument that Yahoo! will be relegated to a second-tier player, Yahoo!'s head of North American ad sales, David Karnstadt, said simply, "I don't subscribe to that.
 
"We want to make it easier to do business," he said. "You can't scale by throwing people at it."
 
Asked after his presentation how Microsoft would tackle "the innovator's dilemma" of some upstart tackling an industry with a fresh approach, McAndrews quipped: "We'll buy them."