Microsoft shuts down its ad-exchange acquisition

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.
Written by Mary Jo Foley, Senior Contributing Editor

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."

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