Monday, August 10, 2009

"Traditional" Ad Agencies -- Making Big Moves to Act Non-Traditionally

Yesterday, it was announced that tech behemoth Microsoft sold its online ad agency, Razorfish, to "traditional" ad agency behemoth Publicis Groupe (Saatchi & Saatchi) for $530 million cash. Microsoft had previously acquired Razorfish in 2007 as part of its overall acquisition of AQuantive for $6 billion.

Why?

For Microsoft, this latest move signals its continuing efforts to significantly cutback its efforts to sell advertising and focus more of its resources on core initiatives (yes, even Microsoft -- with its heaps of billions upon billions -- needs to focus!). Remember, the Redmond-based giant just recently partnered with Yahoo to power Yahoo search with Bing and will rely upon the Yahoo sales team to serve ads against Bing search results (in an attempt to more effectively compete with Google).

For Publicis Groupe, the agency understands that growth in Internet ad initiatives continues to accelerate in terms of importance -- including online video ads (which are still in their very early incarnations). And, the agency understands that it has fallen behind smaller and nimbler firms focused on online initiatives.

Razorfish -- founded in 1995 -- is one of the "grand-daddys" of the Internet/interactive advertising agency world. Publicis has acquired a marquee name with deep contacts. But will the "traditional" agency know what to do with it?

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