Microsoft shuts down its ad-exchange acquisition

Microsoft shuts down its ad-exchange acquisition

Summary: To those wondering why Microsoft has become increasingly cautious about acquisitions, here's another morsel for thought. Microsoft is shuttering its AdECN ad-exchange purchase.

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To those wondering why Microsoft has become increasingly cautious about acquisitions, here's another morsel for thought.

Between 2006 and 2008, Microsoft bought at least eight search/advertising-related companies. On the list: Massive, aQuantive and AdECN, among others.

We've heard about Microsoft allegedly pulling the plug on Massive, its in-game advertising purchase. It has lost a number of its aQuantive execs and sold off part of that company (Razorfish) after buying it. And this week, we learn that Microsoft is closing down AdECN, the ad-exchange network it bought that year.

AllThingsD reported on January 31 that Microsoft has decided to outsource its ad-exchange services to AppNexus instead of using AdECN. From AllThingsD's report:

"In February, ad tech start-up AppNexus will begin selling Microsoft’s 'non-premium' display ads via its own exchange. And Microsoft will essentially pull the plug on AdECN, the exchange it bought in 2007 but only began testing a year ago."

I asked Microsoft what it planned to do with the folks it acquired as part of the AdECN deal. The response, via a spokesperson:

"Microsoft’s extended partnership with AppNexus represents an important building block in our scale display strategy. AppNexus has begun providing core real-time bidded offerings to Microsoft customers and as a result, we have discontinued our investments in AdECN as our RTB platform and are now referring to our offering as the Microsoft Advertising Exchange. The people who were working on AdECN have been redeployed to other roles within the organization, either in support of display or search  advertising."

A couple of other tidbits about AdECN worth noting (via AllThingsD): Microsoft is one of a handful of companies/partners that invested $50 million in AppNexus last year. Meanwhile, Google and AppNexus had quite the public falling out last year.

Thrice burned, thrice shy? Are these kinds of seemingly bad bets at least part of the reason why CEO Steve Ballmer has been putting the brakes on Microsoft's acquisition spree for the past year-plus? Do you blame him?

Update: Not all Softies agree that Microsoft has "discontinued its investments" in its own ad-exchange technology. Tom Phillips, a spokesperson with Microsoft advertising, sent me another (quite different) Microsoft statement later this week about Microsoft's ad-exchange plans/strategy:

"Microsoft Advertising continues to run an ad exchange, using both AppNexus’ and our own technologies. The partnership with AppNexus provides us with an immediate and scalable RTB platform that is in direct response to our customers. We will continue to build value and functionality on top of the AppNexus platform as we evolve and ramp this offering. This is very much in keeping with our desire to partner with others in the ecosystem to bring important services and offerings to the market."

Topics: Banking, Enterprise Software, Microsoft

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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10 comments
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  • Hmmmm....

    Is Steve Ballmer merely using a fire hose to clean out the house, or is he getting the house ready to be sold/broken up?
    techvet
    • Sold or broken up? LOL!

      @techvet. I doubt that!<br>It sounds like MS <i>finally</i> concentrating on the area where they should, while outsourcing things like this to smaller companies that specialize in just these things.

      Google did the same thing with TV/Newspaper ads, deciding that online ads where their forte, so stick with what they know.
      John Zern
    • RE: Microsoft shuts down its ad-exchange acquisition

      @techvet
      Nope. He is really clearing the loose ends. This type of things should be outsourced from the begining instead of doing everything. Microsoft main business is not this and I think it is a right move.
      Ram U
  • Windows and Office

    All MS will ever have. A company at the right place at the right time in history. Go Ballmer, it's fun to watch.
    Richard Flude
    • Much like Apple in that respect

      @Richard Flude, as all they have is the iPhone and iPad.
      But obviouslly Microsoft does scare you, as you do spend much time commenting about them.

      If history has proven anything it would be that people like you tend to speak such on things that scare you.

      Had I emotions I believe I would feel sad when thinking about you.
      :|
      Tim Cook
  • Instead of buy...

    Outsource. Seriously - makes better sense. If it's not the core business and it's not going to drive $$$ keep it out of house. Let engineers focus on what's making money and keep that Operational Expenditure down.
    jessiethe3rd
  • RE: Microsoft shuts down its ad-exchange acquisition

    AdECN (I feel) is far from being a 'seemingly bad bet' made by Microsoft. In reality (when venturing a little 'deeper' into the overall 'scheme' of things - think global), the 'deal' with AppNexus will provide Microsoft and it's own properties a full SEPARATION within the eventual workings of/in a 'new', Global Marketplace being slowly put together.

    http://seekingalpha.com/instablog/36191-lookingconfident/134899-data-at-scale-try-over-a-billion-humans-in-social-media-alone

    There clearly is a lot more than meets the eye in what already is, an exciting space.
    LookingConfident
  • RE: Microsoft shuts down its ad-exchange acquisition

    My own 'take' on that Microsoft-AppNexus relationship?

    http://seekingalpha.com/instablog/36191-lookingconfident/134523-microsoft-appnexus-remnant-partnership-in-open-marketplace
    LookingConfident
  • RE: Microsoft shuts down its ad-exchange acquisition

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