Microsoft, Viacom Forge Alliance

NEW YORK Microsoft is trying to position itself as an online ad powerhouse alternative to Google for media companies. It got a boost in this quest with a wide-ranging deal to sell ad inventory, provide ad technology and distribute content from Viacom properties, including MTV, Comedy Central and BET. Financial terms of the five-year deal were not disclosed, but the companies estimated its worth at up to $500 million. They said it would involve a combination of revenue sharing and licensing fees. The deal came about following initial conversations in September, according to Viacom CEO Philippe Dauman. For Viacom, Microsoft made an ideal partner because it enables the media company access to technology platforms, he said. "It has the will and the resources to commit whatever is necessary to win, and to provide resources to its partners," he said. "We're never going to be the world's greatest technology experts." Another thing the companies have in common: problems with Google. Viacom has tangled with Google, most notably over alleged violations of Viacom's copyrights on Google-owned YouTube. In March, Viacom filed a $1 billion lawsuit against Google. The suit is still pending. Meanwhile, Microsoft is battling Google not just in online advertising, where it badly trails, but increasingly in its core business of productivity applications. The agreement is a major step for Microsoft to establish itself as a credible alternative to Google for media companies looking for digital distribution, technology and ad sales help. It made clear its ambitions were serious with its $6 billion acquisition of aQuantive, which brought it the Atlas ad-serving technology and DrivePM ad network. "We're investing into building a world-class ad platform," said Kevin Johnson, president of Microsoft's platforms and services division. "Our mission is really driving a value proposition for publishers to help them increase their yield on advertising as it goes digital." Atlas will take over from DoubleClick, which Google has inked a deal to acquire, as the ad-serving technology for Viacom's U.S. Web sites. DrivePM and Microsoft's digital advertising solutions group will take over remnant ad sales for Viacom properties, selling banner placements on its U.S. sites that are not sold by Viacom sales teams. The companies will split revenue from the sales. It will also purchase an unspecified amount of inventory on Viacom broadcast and online networks over five years. One area the agreements did not touch: search advertising. Viacom in April signed a multiyear deal with Yahoo! to power search on Viacom's U.S. Web sites. Viacom and Google also agreed to work together on casual gaming, and Microsoft will promote Viacom events, such as the MTV and BET awards shows. The agreement is another sign of the land grab under way by the major Internet companies to lock up inventory. In addition to selling ads on its own properties, Microsoft has been making inroads in securing inventory on other properties. Earlier this month, Microsoft sewed up an agreement with CNBC to sell most of the ad inventory for its online property. It outbid Google in October for the right to sell advertising on Facebook in a $240 million deal that values the social network at $15 billion. "You look at the scale we have internally combined with other large properties on the Internet," Johnson said. "All this is about building a world-class advertising platform."

Brand Marketing

Microsoft, Viacom Forge Alliance

Brian Morrissey

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Brian Morrissey