Razorfish owned by Microsoft. What next?
With all the analysis and reactions to the Microsoft acquisition of aQuantive last, I missed the fact that aQuantive is the parent company of the interactive marketing agency Razorfish (Avenue A/Razorfish). Brian Fling pointed this out and linked to this Advertising Age article commenting on this dimension of the deal:
"Last week's $6 billion agreement to buy aQuantive is not just a bid to catch up with Google and Yahoo in ad sales. It also gives Redmond something it hasn't had before: Its very own ad agency. The addition of the highly regarded Avenue A/Razorfish to its portfolio signals that Microsoft, in addition to being a media seller, has crept into the agency business, blurring the once-clear distinctions between those who hawk technology and those who provide marketing services."
So on to the obvious question next - will Avenue A/Razorfish be divested any time soon? Apparently not:
"Industry observers who expected the deal were shocked it didn't include an announcement that Microsoft would somehow offload Avenue A with a spinoff or a sale. While insiders seemed convinced it would divest the business, Microsoft was public and definitive in denying there were any such plans. On the contrary, a Microsoft executive emphasized that Avenue A's capabilities actually sweetened the deal. "
Of course, this could just be temporary PR messaging to see the deal through, diverting from an unwritten plan to execute the divestment once the dust settles. But maybe not. This Microsoft / aQuantive deal would be somewhat analogous to Google (or IBM) buying up WPP or Yahoo (or NewsCorp / MySpace) buying Omnicom...and they would follow a trend:
"...recently the deal-making has taken on a different color. Interpublic, which has less cash to spend, has been taking stakes in media plays such as Facebook and platforms such as the do-it-yourself ad solution Spot Runner. A day before the aQuantive deal, WPP Group, home of JWT and Ogilvy & Mather, said it would pay $650 million for 24/7 Real Media, an ad-serving platform."
As Michael Creamer points out, this deal appears to be a strong signal that previously unrelated segments of the economy are converging, a further realization of the digitial convergence predictions made in the last decade.