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Sunday, August 09, 2021

It’s not so remarkable that Microsoft got out of the digital ad agency business today by selling Razorfish for around $500-600 million. What’s impressive is the key long-term provisions they baked into the transaction:

A big part of the deal is what is being called a strategic alliance agreement between Microsoft, based in Redmond, Wash., and Publicis, which also owns agencies like Saatchi & Saatchi, Leo Burnett, the MediaVest Group and ZenithOptimedia.

The alliance agreement, which is to run for five years, calls for Publicis to buy a minimum guaranteed level of display and search advertising using Microsoft properties like msn.com and bing.com, the new search engine. Trade publications have estimated that guaranteed level in the hundreds of millions of dollars.

The alliance agreement also calls for Microsoft to spend a minimum guaranteed amount with Razorfish.

So not only did Microsoft unload a non-core business unit, it also ensured a huge infusion of ad buys into online properties, capitalizing upon Bing’s early traction. Not only that, but this Publicis alliance dovetails with the previous big deal to power Yahoo!’s search with Bing technology: Microsoft can now deliver user search data from Y! Network sites to Publicis and its clients. It puts Microsoft squarely at the heart of a lot of online consumer behavior.

I can’t believe this is Microsoft making these shrewd moves. I guess there’s been some personnel shifts to drive a lot of this, but that’s never been enough in the past. These kinds of coordinated maneuvers hint at deep organizational adjustments — something I didn’t think the Big Redmond Machine had in it. Based just on these business acrobatics, I really think Mountain View has justified reason to worry now…

by Costa Tsiokos, Sun 08/09/2021 06:27:09 PM
Category: Advert./Mktg., Business, Internet
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  1. [...] is incredulous about the MS / Razorfish deal. Also, his headline is [...]

    Pingback by » Links You Need To Click: 8/10/09 » tombiro.com — 08/10/2021 @ 02:29:27 PM

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