Microsoft Completes aQuantive Buy

NEW YORK Microsoft said it has completed its $6 billion acquisition of aQuantive and immediately created a new division to house its digital advertising assets.

Under the new structure, Microsoft has created an advertiser and publisher solutions unit, which will contain aQuantive’s Atlas ad server, DrivePM ad network and digital agency Avenue A/Razorfish. The group will also house Microsoft’s adCenter platform, MSNDR direct-response offering and an emerging media group with video game network Massive and mobile network Screen Tonic.

Brian McAndrews, aQuantive’s CEO, will lead the advertiser and publisher solutions unit, reporting to Kevin Johnson, president of Microsoft’s platforms and services division.

The new structure will give Microsoft an opportunity to be a bigger player in the growing online ad business, which the company pegs at $40 billion today and doubling by 2010, he said.

“We’re committed and serious about investing and going at this $80 billion market opportunity,” he said.

Johnson reiterated Microsoft’s commitment to keeping Avenue A/Razorfish as part of the company, since it would give it perspective of what tools and services agencies needed to serve their clients well.

“With Avenue A/Razorfish, we have a direct perspective of what it’s like to be an agency,” he said. “I think that’s a great asset.”

The operating structure, which keeps Microsoft’s MSN portal and ad sales team in a separate online services unit, would enable the company to manage the potential conflict of Avenue A/Razorfish negotiating to buy media from MSN, McAndrews said, citing aQuantive’s experience managing ad network, server and agency businesses.

“We’ve been able to manage it as an arm’s length business,” he said.

In other role changes, aQuantive co-founder and chief strategy officer Mike Galgon will become chief advertising strategist, reporting to McAndrews. Yusuf Mehdi, formerly in that role at Microsoft, is now svp of strategic partnerships in the platforms and services division, reporting to Johnson. Cory Van Arsdale, CEO of Massive, will lead the emerging media unit, reporting to Karl Siebrecht, president of Atlas.

“The end goal is for us to deliver great value and build a strong position as an ad platform, which includes the buy-sell process, the ad-serving capability to deliver targeted ads and providing the industry-leading tools and solutions for advertisers and publishers,” Johnson said. “It involves doing this across a broad range of digital media.”