In May of 2007, Microsoft acquired aQuantive at an ungodly (premium) price. The company was comprised of a digital ad-networking business and a set of interactive agencies under the jammed-together moniker of Avenue A/Razorfish, the latter a result of an even-earlier combination.
I predicted at the time in an AdGabber/Adrants discussion forum that Microsoft would:
- Divest the Avenue A/Razorfish portion
- By end of 2007
- Because it wouldn’t be able to assimilate the agency culture
Looks like I am only going to get the first one of those right. My timing was way off, because my logic was misguided.
At the end of this August, word hit the street that WPP was in talks to take Avenue A/Razorfish off Microsoft’s hands. And just this week, the latter dropped “Avenue A” and is now simply called “Razorfish.”
So, it is coming together, but not for the reason I thought. My prediction was based on the fact that Microsoft, in all its years, has never been able to market and sell a sustainable, value-added services organization. And even though Avenue A/Razorfish represented well over half of aQuantive’s business, I felt the cultural friction would heat up in no time.
I missed the obvious. Microsoft’s pursuit of Yahoo was not a 2008 phenomenon - it was going on back in May 2007. The Redmond team wanted desperately to be in the media business, and aQuantive was a decent substitute when no progress could be made against Yahoo.
At the time, Microsoft must have believed, or was led to believe, that the media and interactive agency parts of aQuantive were synchronous. I don’t know who pointed it out, or when, but it now knows they are not. And since Microsoft is used to stratospheric operating margins, it will stick with the 50% media brings rather than the 20% agency work does.
(In an ideal world, Razorfish would be spun out as a public company, and regain its independence to continue its tremendous growth. The current economic and financial environment might preclude this outcome. A shame.)
There was a raft of advertising and media agency mergers in the early 2000s. They are all, officially or unofficially, undone. And last week at the ANA conference, client-side panelists spoke about by-passing creative shops completely, and going direct to their media agency partners.
All of this says we might be just about out of room for any more nails in the “bundled agency-media” coffin.
JUST WONDERING…Who is getting richer off of Vista’s troubles this year - Justin Long or Steve Jobs?