Microsoft pours more cold water on Yahoo-merger speculation

Summary:After shelling out $6 billion for advertising powerhouse aQuantive, is Microsoft still interested in a possible Yahoo acquisition? Although Microsoft execs won't come right out and say it, it sounds like the answer is no.

After shelling out $6 billion for advertising powerhouse aQuantive, is Microsoft still interested in a possible Yahoo acquisition? Although Microsoft execs won't come right out and say it, it sounds like the answer is no.

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Microsoft doesn't need Yahoo's Panama online-ad platform. Without it, Microsoft is still sitting pretty right now, in terms of its advertising strategy said Yusuf Mehdi, Senior Vice president and Chief Advertising Strategist, who presented on May 23 at the Goldman Sachs Internet Conference. (Mehdi's presentation was Web-cast, so I had a chance to listen.)

For 45 minutes, Mehdi took questions from Goldman Internet and Entertainment analyst Anthony Noto and a couple of other conference participants.

Noto asked Mehdi whether Microsoft might still be considering making another large acqusition, such as the long-rumored Yahoo one, to fill out its advertising portfolio.

Mehdi said that other than a few "small pieces we're getting to -- organically and otherwise -- we have all of the pieces we need to be one of the top ad platforms."

Like Steve Berkowitz, Microsoft's Senior Vice President of Online Services (who also addressed an analyst conference this week), Mehdi emphasized the convergence of Microsoft's various advertising-related assets. In addition to aQuantive, Microsoft's acquisitions of Massive (in-game advertising), TellMe (voice-activated search), MedStory (healthcare search engine), ScreenTonic (mobile search ad platform) and MotionBridge (another mobile search provider) give the company a large family of ad platforms and properties. Microsoft plans to offer advertisers ways to provide ads across the full spectrum of platforms -- games, IPTV, online sites, online services and software, both Mehdi and Berkowitz said.

Microsoft online advertising platform, adCenter, will continue to be the centerpiece of its advertising strategy, Mehdi said.

"We are very committed to our ad platform," Mehdi told the Goldman Sachs conference attendees. He said Microsoft currently has 80,000 advertisers signed up to use the platform and that adCenter already has surpassed the monetization provided by Microsoft' old Overture ad platform.

Also like Berkowitz, Mehdi attempted to downplay Microsoft's lackluster search marketshare by emphasizing it potential in the broader advertising market.

"Search and display advertising have essentially converged," Mehdi said. The game is "no longer just about pages served," Mehdi added. "It's a converged marketplace."

Microsoft isn't giving up on search, Mehdi said; Microsoft is "absolutely commmitted" to remaining a strong competitor in that space, he said. But in Microsoft's -- and its advertisers' -- views, buying audiences, not pages, is becoming more of an area of interest.

"We believe we have the largest audience to monetize," Mehdi said.

Topics: Microsoft

About

Mary Jo Foley has covered the tech industry for 30 years for a variety of publications, including ZDNet, eWeek and Baseline. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008). She also is the cohost of the "Windows Weekly" podcast on the TWiT network. Got a tip? Se... Full Bio

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