Traditional biz come one step closer to online technology

[sleepingfool]

WPP Group to Acquire Online Ad Company


By LOUISE STORY
Published: May 18, 2007

Correction Appended

In an effort to catch up with Google’s fast-growing online advertising business, the WPP Group, the advertising holding company that owns traditional ad agencies like JWT and the Grey Global Group, agreed yesterday to pay about $649 million to acquire 24/7 Real Media, an advertising network and technology company.

WPP’s chief executive, Martin Sorrell, who called Google a “frenemy” last fall, has publicly expressed concern in recent weeks about Google’s plan to pay $3.1 billion to acquire DoubleClick, another online advertising company that has a strong presence in display advertising. Antitrust regulators are evaluating that purchase.

“Martin Sorrell has said that he views Google as a ‘frenemy,’ ” said Dave Morgan, chairman of Tacoda, an online ad network, and former chief executive at a company that became part of 24/7 Real Media. “He wants Google to view him as a frenemy, too. He has now given his response, which is that he’s not going to just sit and wait and see what happens. He’s going to take an aggressive position against a world where Google and Yahoo will dominate.”

Big brand advertisers like Procter & Gamble and Johnson & Johnson are increasingly shifting their advertising budgets away from traditional media like television and newspapers to digital advertising on the Internet. As that money moves online, the WPP Group and other traditional advertising companies are at risk of losing their grip over the creation and sales of ads.

“This really heightens the tension between ad agencies and technology companies as they both try to go after the ad dollars that are migrating online,” said Youssef Squali, the Internet analyst at Jefferies & Company.

The WPP Group and other ad holding companies make most of their money by creating ads and planning where they should appear. Now, WPP plans to develop a third major line of business in the online technology space using 24/7 Real Media as its foundation, Mr. Sorrell said in a conference call.

“You can call it a tipping point if you want, but I think there has been a tipping point in terms of the realization of the impact of these technologies,” Mr. Sorrell said.

WPP is paying $11.75 a share for 24/7 Real Media, which manages a search optimization business, a network of Web sites that display ads and a business that delivers ads online. WPP will now move beyond creating ads into the technology business that underlies the invisible infrastructure that delivers ads to Web users based on their interests and demographics.

Shares of 24/7 Real Media rose 39 cents, to $11.65. Shares of WPP rose 11 cents, to $75.14.

WPP is also trying to catch up with one of its main competitors, the Publicis Groupe, a holding company based in France. In December, Publicis paid $1.3 billion to buy Digitas, a leading online agency. At that time, analysts said that Publicis was the strongest ad holding company in online advertising.

Over the last year, WPP has invested in several digital companies like VideoEgg and Wild Tangent, bought interactive agencies like Bridge Worldwide and Zaaz and invested in Spot Runner, a company that provides technology to automate the production of ads.

24/7 Real Media will operate as a standalone company within WPP and continue to serve ad agencies that are not part of WPP, said Dave Moore, the chairman and chief executive of 24/7 Real Media. It will also work with all of WPP’s agencies to update their technologies and practices for the digital future, said Mark Read, chief executive of WPP Digital.

“I think in five years it’s going to be hard to tell what’s digital and what’s not digital,” Mr. Read said in an interview. “The lines are blurring and all media is becoming digital.”

Speculation about a purchase of 24/7 Real Media has been swirling since Google’s announcement of its DoubleClick deal. Microsoft and AT&T, which deliver online television services through the Internet, have also expressed concerns about a Google-DoubleClick combination.

“In the marketplace there will be an increasing need for an alternative given the shifts that have taken place recently,” Mr. Sorrell said in the conference call. “Our acquisition of Real Media will bring a little, a small amount, of balance into the marketplace.”

24/7 Real Media was formed in 2001 from the merger of two pioneering Internet companies, 24/7 Media and Real Media. The company, based in New York, generated $200 million in revenue last year and has substantial operations in Europe and Asia, including a joint venture in Japan with Dentsu, the largest ad agency there.

Correction: May 22, 2007

A headline in Business Day on Friday with an article about the sale of 24/7 Real Media, the advertising network and technology company, to the WPP Group misstated the price of the deal. As the article noted, it was $649 million, not $64 million.

http://www.nytimes.com/2007/05/18/business/media/18online.html?fta=y

A trend likes the above wave will occur in VN next 5 - 7 years, I guest.

[sleepingfool]

Ôi buồn thật,

Các MBA nhà ta chẳng mấy ai quan tâm đến động lực quan trọng nhất để làm phẳng thế giới này cả??? Chỉ có 4 người thôi!!!

[Longatum]

Đồng chí này buồn về những chuyện hay nhỉ? post 1 bài cũ từ hồi tháng 5 xong rồi lại bắt bà con comment cái gì bây giờ

http://dealbook.blogs.nytimes.com/2007/09/28/zuckerberg-sightings-fuel-deal-speculation/

Zuckerberg Sightings Fuel Deal Speculation
September 28, 2007, 8:51 am
Industry watchers are so hyped-up over the news that Microsoft may invest in Facebook that it has led to Gawker-Stalker-like sighting reports.

Facebook’s chief executive, Mark Zuckerberg, was spotted Tuesday in Seattle, headed for meetings with executives at Microsoft, according to Fortune, which said the sighting lent credence to reports this week that Microsoft was contemplating a major investment in the fast-growing social network.

The New York Times, among others, reported that Microsoft, Google and several funds are considering investments in the fast-growing site that could give the start-up a value of more than $10 billion.

[Longatum]

http://online.wsj.com/article/SB119065193646437586.html?mod=rss_Today's_Most_Pop ular


Microsoft Fires Volley
At Google in Ad Battle
It Seeks Facebook Stake,
Names New Executive
To Close Internet Gap
By KEVIN J. DELANEY, ROBERT A. GUTH and VAUHINI VARA
September 25, 2007; Page A1

The battle of titans between Microsoft Corp. and Google Inc. over the future of the Internet is about to get even hotter.

Microsoft is in talks to buy a minority stake in the popular social-networking Web site Facebook Inc., a sign of a new urgency by the software giant to jump-start its online business at a time when Google is widening its lead in the fast-growing Internet-advertising business. As part of its catch-up program, Microsoft also has quietly granted broad powers to an executive recently hired from outside the company, who is expected to help shake up the software giant's online business.
Microsoft in recent weeks approached Facebook with proposals to invest in the startup that could value the fast-growing site at $10 billion or higher, said people familiar with the matter. If those talks bear fruit, Microsoft could purchase a stake of up to 5% in the closely held startup, at a cost in the range of $300 million to $500 million, the people said.

But Microsoft must first outgun Google, which has also expressed strong interest in a Facebook stake, according to people familiar with the matter.

The Facebook talks come as Microsoft's top management is making another significant move at its online-advertising business. The company is expected to give increasing oversight of its Internet operations to Brian McAndrews, an advertising executive who joined Microsoft just last month through its $6 billion acquisition of aQuantive Inc., an online-advertising specialist that is also part of Microsoft's strategic push. His broad mission will be to increase the number of advertisers that buy ads through Microsoft's system and Web publishers that tap into it for ads to run on their sites.

Microsoft's Internet thrust is fueled by concerns among its executives that the maturing tech company isn't moving quickly enough to establish a broad beachhead in the online-advertising world, say people familiar with the company. Along with Google, Time Warner Inc.'s America Online unit, Yahoo Inc. and others, Microsoft is racing to establish what's known in technology circles as a "platform" -- in this case a single system through which advertisers can buy ads that appear on a multitude of sites and Web publishers can tap for ads to appear on their sites. That approach has taken on added importance as users and advertisers increasingly spend time and dollars on sites other than the big, established Web portals.

Turning Point

Some industry executives believe the Internet today is facing the sort of turning point that the computer-operating-system sector confronted two decades ago: Whoever controls the technology platform for buying and selling online ads could hold tremendous power over the Internet industry for years to come -- much as Microsoft was able to use its Windows operating system to shape the personal computer.

Google, Microsoft's chief rival in that area, remains far ahead of Microsoft in terms of the online-advertising revenue it generates and the number of advertisers and Web publishers that use its systems. One person familiar with the matter says that over one million advertisers now buy ads using Google's system; Microsoft is believed to have only a small fraction of that number.

Search Engines

Google brought in $3.9 billion in revenue in the second quarter, almost entirely from online ads, while Microsoft's online group posted revenue of just $688 million in the same quarter. Google handled 54% of all U.S. search queries in August, more than four times the 13% share of third-place Microsoft's search engine, according to research firm NetRatings Inc. Yahoo, in second place, handled 20%. In another front in their Internet ad battle, Microsoft executives and a public-relations firm retained by the software giant have recently been trying to stir up opposition to Google's planned $3.1 billion acquisition of DoubleClick Inc., an online advertising specialist and aQuantive rival.

Microsoft believes a closer relationship with Facebook could help shift the balance of power, by helping it tap into a fast-growing pool of users and advertisers for its platform. Facebook, which is used by more than 40 million people to set up their own personal Web pages, to communicate with each other and to share photos and videos, has emerged as the poster child for the latest Internet wave. The company expects this year to have a profit of $30 million on revenue of $150 million, according to people familiar with the matter.

Based on that profit level, a $10 billion valuation for the company is sky-high. But an investment in Facebook could give Microsoft or Google greater opportunities to tie their services in with Facebook at a time when they've both recognized that social networking is changing how consumers tap into the core activities they offer, such as Web search and email.

Facebook also has discussed possible ad relationships with Google, said a person familiar with the matter, though an existing Microsoft agreement over serving ads limits the options.

Microsoft representatives declined to comment for this story. A Facebook spokeswoman and a spokesman for Google declined to comment.

Facebook still could wind up not taking an investment from either Microsoft or Google, said people familiar with the matter. Factors in the discussions include the valuation the suitors would offer to Facebook and other business considerations they could contribute to sweeten any deal.

Raising Cash

Facebook is considering raising as much as $500 million total in cash that could be used for acquisitions, investing in computer infrastructure and adding to its roughly 300-person head count, said people familiar with the matter. Facebook's top priority now is developing an ad platform of its own that would let marketers target users with ads based on their personal information, using an automated Web-based system, according to people familiar with the matter.

One sticky issue: A Microsoft investment could ultimately give Facebook ammunition to fuel its own rival technology and advertising platforms. Facebook has aspirations of competing with Google and Microsoft on its own, and has indicated that it might hold out for a higher valuation than Microsoft is willing to agree on -- as much as $15 billion, the people said.

Microsoft's push is the latest in a string of attempts to energize its Internet activity in recent years, with mixed results. The company, for instance, spent hundreds of millions of dollars to release its own search engine to replace technology it was licensing from Yahoo, then saw its search market share drop.

New Openness

Such disappointments have spurred an openness among Microsoft's top management for new deals such as the one with Facebook and new perspectives. Mr. McAndrews, 48 years old, is a central player in the online advertising industry and has strong ties to traditional advertising companies and large advertisers, connections that have been lacking at technology-centric Microsoft.

Microsoft is now banking on Mr. McAndrews to add what insiders say is much-needed leadership to its online efforts. Mr. McAndrews will oversee Microsoft's relationships with Internet companies and advertising agencies and manage the ad platform. His team, from aQuantive, is expected to assume greater responsibilities over the next year, people familiar with the matter say.

Power Shift

Mr. McAndrews's rise marks a power shift from Microsoft executives who to date have guided the company's Internet strategy. Just 17 months ago Microsoft hired Steve Berkowitz, from Internet search company Ask.com, a unit of IAC/InterActiveCorp, as a vice president in its online group. Much as Mr. McAndrews is seen today, Mr. Berkowitz was positioned as the outsider needed to lead a cultural change at a company strong on technology but short on experience in the advertising industry.

A lack of political chops in working within the huge company and a clash with a highly respected engineering manager have hampered Mr. Berkowitz, say people familiar with the matter. Several of Mr. Berkowitz's duties were recently ceded to Mr. McAndrews. Mr. Berkowitz remains the head of Microsoft's Web properties and existing deals with Facebook and news site Digg.com. A Microsoft spokesman declined to comment about Mr. Berkowitz.

But Mr. McAndrews probably would play a key role in managing any deeper Facebook strategy. As part of any new deal, Microsoft and Facebook may also expand an exclusive agreement signed last year under which Microsoft serves display ads to Facebook, according to a person familiar with the matter.

Facebook's Traffic

The existing deal is expected to bring in about $75 million for Facebook this year and a total of at least $200 million to $300 million through 2011, say people familiar with the matter. The actual numbers will depend on Facebook's traffic growth and other factors, these people say. The existing agreement covers only the U.S. and expires in 2011, but the companies are discussing whether to extend it for a longer period and expand it beyond the U.S., this person said.

Microsoft has considered trying to buy the company outright, but people familiar with the matter said it's unlikely at this time. Facebook founder Mark Zuckerberg has steadfastly kept his company independent with the goal of eventually taking the company public. In a round of negotiations last year, Mr. Zuckerberg rebuffed acquisition approaches from Microsoft, Yahoo and others.

The startup also is considering raising funds from financial investors, which could be in addition to or instead of an investment from a strategic investor like Microsoft or Google, one person said. The company has so far raised about $40.7 million from venture-capital firms including Founders Fund, Accel Partners and Greylock Partners.

Adding Users

One open question amid the courting of Facebook is whether the site, which adds more than 200,000 new users a day, will be able to translate its popularity into Google-scale revenue and profits. Some advertisers say ads on Facebook don't bring sales leads as effectively as those on other sites. That could be because Facebook users don't pay as much attention to ads as people conducting Web searches, for instance.

Jen Zepeda, a 23-year-old Stanford University graduate who has a high-paying finance job at an Internet company, travels often, doesn't look at price tags when she shops and dines out at fancy restaurants. But though she visits Facebook at least once a day, she says she barely notices the display ads and never clicks on them. "I like that the ads on Facebook are subtle," she says. "But I guess that's not good for them."

Facebook's own plans for an advertising platform, which it hopes to release later this year, are aimed at addressing the issue by displaying ads that appeal more to individual users, based on those users' personal information. Microsoft also has plans to improve targeting for the display ads it brokers on Facebook. News Corp.'s MySpace has also started testing more targeted ads in the past few months. But it's unclear whether some users will be uncomfortable with such ad targeting, and revolt.

[Longatum]

huhu, thằng Zukerberg nó học Harvard cùng hồi em ở bên đấy :-( em có mấy thằng bạn cũng quen thằng này :-((

Harvard hồi đấy còn có em Natalie Portman học... em quen mấy đứa học cùng lớp Psychology với em này :D oai vật :">

[sleepingfool]

Ah, chỉ là mình thấy mọi người ít vote quá thôi nên thử claim xem thế nào.
( Mà cũng không để ý là bài từ tháng 5 vì đọc trên trang nhất mục Technology của NYT cứ default là nó mới ra lò). Nhưng mà nhờ claim vậy nên mới biết có Long cũng quan tâm mấy vụ này. Zuckerberg sắp kiếm được 10 tỉ thì bác Long học cùng trường kiếm 1% của hắn thôi, 100 million là ok rồi ;)

Hình như Facebook ban đầu chỉ dự đinh làm nhỏ nhỏ cho sinh viên Harvard dùng thôi thì phải, sau này lại phát triển quá mạnh. Chắc Long cũng biết nhiều về chú này, tại sao FB thành công nhanh chóng nhỉ (trong lúc đã có quá nhiều online community rồi) ???

Đồng chí này buồn về những chuyện hay nhỉ? post 1 bài cũ từ hồi tháng 5 xong rồi lại bắt bà con comment cái gì bây giờ

http://dealbook.blogs.nytimes.com/2007/09/28/zuckerberg-sightings-fuel-deal-speculation/

Zuckerberg Sightings Fuel Deal Speculation
September 28, 2007, 8:51 am
Industry watchers are so hyped-up over the news that Microsoft may invest in Facebook that it has led to Gawker-Stalker-like sighting reports.

Facebook’s chief executive, Mark Zuckerberg, was spotted Tuesday in Seattle, headed for meetings with executives at Microsoft, according to Fortune, which said the sighting lent credence to reports this week that Microsoft was contemplating a major investment in the fast-growing social network.

The New York Times, among others, reported that Microsoft, Google and several funds are considering investments in the fast-growing site that could give the start-up a value of more than $10 billion.