May 18th, 2007
Big news today….Microsoft is buying an online advertising firm called aQuantive Inc. for the tidy sum of $6 billion….in cash. This really comes as no shock since both of Microsoft’s biggest competitors in the search industry have recently acquired major advertising firms. The first was Google and its purchase of DoubleClick Inc. for $3.1 billion, then came Yahoo! with its purchase of Right Media Inc. for $680 million. Then yesterday, WPP Group PLC (world’s 2nd largest advertising and marketing megahouse) announced the purchase of an online ad company called 24/7 Real Media Inc. Microsoft was in the running to purchase 24/7, but apparently 24/7 had other suitors.
Here’s what Microsoft Chief Executive Officer Steve Ballmer had to say about the aQuantive acquisition:
"Microsoft is intensely committed to creating a thriving advertising business and to partnering closely with all key constituencies in this industry to help maximize the digital advertising opportunity for all,"
So, what’s going on here? Do all of the big dogs know something that we don’t? This looks very similar to the Star Wars race between Russia and the US some years back. Whoever can amass the biggest and most lethal arsenal wins….ready, set, go! Google, Yahoo!, and MSN are in a race to see who can dominate the online ad world. And who can blame them? There’s lots of money to be made in this industry.
These are very interesting times. It’s clear that all three of these major players are trying to capture a bigger piece of the $40 billion dollar online advertising market…which happens to be growing at 20% per year. But what does this mean for us little guys?
Well, for starters, it looks like we’re in for some challenging work in the online ad space. With this online industry consolidation, big companies like Google, Yahoo!, and MSN will be able to offer advertising much more efficiently and, due to economies of scale, much cheaper. They are clearly plotting against us SEO’ers and trying to drive us out of business. 🙂 I mean, in 5 years who will be able to justify paying a PPC firm to manage their online campaign when a company can have its secretary, I mean administrative assistant, manage the campaign directly through the respective search engines?
I think there will always be a need for SEO’s and online marketers, but it seems that the online fragmentation is becoming, well, less fragmented. Big companies are getting hip to the idea that their deep pockets can keep attracting more and more traffic, which means less and less traffic for the little guys. The same holds true for online advertising. It’s an age-old adage…cut out the middle man = more profits for me!! Google, Yahoo!, and Microsoft will continue their march toward total industry consolidation so that we (the stupid majority) can access one-stop shopping. It’s virtual castration…an online lobotomy, if you will.
I guess I can always go back to waiting tables! 🙂
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