Q&A: Microsoft’s Doran

NEW YORK Microsoft’s $6 billion pending acquisition of aQuantive was noteworthy for several reasons in addition to the huge price tag.

Joe Doran, general manager of Microsoft’s Digital Advertising Solutions unit, talks about the motivations behind the deal, and whether Microsoft will be able to own and operate its principal interactive agency, Avenue A/Razorfish, without raising conflict of interest issues.

Q: Microsoft’s been mentioned in several acquisitions that went to other companies. Why aQuantive?
A: When we thought about building our next generation advertising systems and really delivering value for the advertisers, publishers and agencies, we wanted to make broader investments in the platforms, tools and services that hit them. AQuantive gives us complementary assets that are focused on going in the same strategic direction, so we can deliver an enhanced advertising platform. It will help us become the industry-leading advertising platform.

You’re acquiring one of the largest buyers of online advertising and probably one of your biggest agency customers. Isn’t that an obvious conflict?
We recognize there may be a perception of a conflict. We want to make sure we draw that distinction for the rest of the agency community, as well as for advertisers and publishers. We will be operating Avenue A as a stand-alone as much as possible. We do see significant strategic assets and value in Avenue A, and [in] the thought leadership they have. What we’re hoping to do, in much the way aQuantive has done, is take the voice of the marketer they get directly from their customers and embed it in building the right tools and services that make the buying process better, easier, smarter and more efficient.

That’s a completely different situation than the one the ad world has operated under, isn’t it? Microsoft is going to be buying a lot of advertising from Google.
Avenue A needs to be able to continue to operate as an independent agency on behalf of advertisers and marketers so they can buy on Yahoo!, Google, AOL and every other Internet property out there. We want to give them the tools to be able to do that. We want to enhance those tools and capabilities for them.

Is there now a blurring of the lines between media providers and marketing services companies?
I think there’s some blurring of the lines. The way I think about it is, at our heart, we’re a partner company. We want to go and build world-class tools and services that will help everybody. At the end of the day, that’s what [aQuantive’s] Atlas has been trying to do. Their first and best company is Avenue A, but there’s lots of advertising agencies that can use that tool set. We believe [with] the combination of our assets, technology and software developers we can continue to drive innovation in that space and make the buying process easier. We want to make media buying and selling easier and more efficient so the advertiser is getting the ROI they want.

How will this link up with adCenter, Microsoft’s digital ad platform?
We’re going to be working to see what the good, deep integration will be. We have a very common strategy. We think there’s tremendous opportunity for us to share technology and put those resources together to really accelerate our pace of innovation in this space. We think very strongly about the assets we have with what we call our remnant inventory program. We’ve been utilizing technology for Atlas and DrivePM for that.

How do you keep talent through the acquisition?
It’s [an issue] we’re addressing full on. We’re very committed to retaining those employees. They’re our critical asset, the ones who produce the intellectual property and really help drive our business forward. We’re assuring them that aQuantive’s culture, which is similar to ours, will continue to grow and thrive. We’re very excited about retaining that talent. This is as much about the people as the assets and the business they have.

How do you deal with managing a services business like an agency?
There are nuances with it. We as a company have struggled with the Internet services business. The managing team that’s running Avenue A/Razorfish is just excellent. There’s tremendous lessons we can learn from them and bring into our own services group. But we’ll work hard to maintain the services culture they have. We think this type of business is the future.