Make Money Online
Microsoft moves into Online Advertising
Microsoft certainly knows how to make money online buying advertising agency aQuantive for $6 billion in cash, paid for using Bill Gates's American Express card ! (that was a joke). They paid 85% more than the company was valued at on Thursday evening. So we can tell, if someone offers you 85% more for your house than its current valuation, they are desperate!
Microsoft are running behind Google desperately trying to catch up and get a presence in the online ad. business. This has got to be good news for bloggers or website publishers who make their money from the ads. on their sites . As Microsoft launches an aggresssive campaign to compete with Google , it seems to me prices for ads. will be forced up. I would expect Microsoft at some point to come up with an alternative to Adsense, which at the moment has a virtual monopoly. Microsoft to buy Bidervtiser? You heard it here first !
"This deal takes our advertising business to a new level," said Microsoft CEO Kevin Johnson "it allows us to take a bigger piece of that $40 billion pie that is still growing." (!)
The deal is important, because Microsoft's online services are becoming increasingly dependent upon online advertising. According to David Smith at Gartner the deal had become a necessity for Microsoft due to the changing economics of its business. "This is a big step" he said "but they're still significantly behind Google,"
Microsoft executives disclosed that they were not the only ones interested in buying aQuantive, which no doubt explains the hefty pre-emptive price tag. Though they said they were 'happy' to pay the price they did. In the past Microsoft has been a conservative buyer and it has walked away from deals if they got too expensive. Well, anyone who has been on Ebay will know the feeling.
Microsoft has apparently been trying to buy Yahoo for around $50 billion, but Yahoo refused to play ball, but Microsoft may not have given up yet.
aQuantive's revenue is tiny, $142.6 million for Q1, compared to Microsoft and they will not be revising their short-term earnings guidance as a result, but clearly this was a company they couldn't let get away if they are to compete with Google.