Microsoft this week announced that it had completed its $6 billion purchase of aQuantive, the hitherto unknown Web advertising firm that it had sought out after losing a bid for market leader DoubleClick to Google. With the acquisition, Microsoft is also adding a new Advertiser and Publisher Solutions (APS) business group to its online unit that will be run by the former CEO of aQuantive.
"Today we take a significant step forward in our ability to capture share of the $40 billion online ad opportunity and the larger $600 billion ad market, which is rapidly shifting to the world of online and IP-served platforms, including TV and gaming," said Microsoft president Kevin Johnson. "The addition of aQuantive's technologies and people to the Microsoft portfolio is a core, strategic investment and step forward in our plans to become one of the top two online advertising platforms in the industry."
The new APS team at Microsoft will be responsible for all of Microsoft's advertising-related projects going forward, including the former aQuantive portfolio, as well as Atlas, DRIVEpm, MSNDR, Microsoft AdCenter, the Massive in-game advertising work, and the ScreenTonic mobile advertising effort. Former aQuantive CEO Brian McAndrews will now run APS, while Steve Berkowitz, who previously ran Microsoft's entire online unit, will now run the MSN.com portal, Windows Live, and Live Search, or what Microsoft calls its "audience" business.
Of course, Microsoft is fairly adept at reorganizations. What the company hasn't been able to do is capitalize on its online businesses. Currently, Microsoft is number three in the online advertising revenue and search traffic behind Google and Yahoo!, though the latter is struggling and could fall behind. For Microsoft to be successful at all in this business, it's not enough to be number two. It has to be a serious alternative to Google, and that's something that's pretty hard to imagine at the moment.