Microsoft shakes up online management

JUST as Microsoft appears ready to up the ante in its US$45 billion (A$49.6 billion) unsolicited takeover bid for internet giant Yahoo, the company has shaken up management of its online division.

And reports in the US say the management changes – announced by Microsoft chief executive Steve Ballmer – prepare the ground for a merge with Yahoo.

The company said former aQuantive chief executive Brian McAndrews – who joined Microsoft when the digital advertising firm was acquired last year – will take expanded roles in the Microsoft Online Services division.

Steve Berkowitz will step down as senior vice-president of the Online Services Group. He will remain with the company, focusing on a smooth transition of the business, until the end of August.

Mr Ballmer also announced the promotion of Satya Nadella to senior vice-president Search Portals & Advertising Group, and Bill Veghte to Senior VP of the Online Services and Windows Business Group.

Analysts in the US say the promotion of Mr McAndrews is significant and that he will most like be the top lieutenant in any Microsoft-Yahoo combination

Microsoft responded saying the raft of changes had nothing to do with the Yahoo bid, and that there had been other senior management changes also announced yesterday that were outside of the Online Services Group.

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Online ad spend to double by 2011

SPENDING on online advertising in the US will grow to more than US$21 billion ($22.6 billion) this year, and double to US$42 billion in 2011, according to research firm eMarketer.

The company said generally gloomy industry forecasts for traditional advertising – a result of concerns about the US economy – were unlikely to hurt online advertising as badly as the rest of the media.

“Even as the credit crunch pulls ad money off the total media table, the internet looks to be more resistant to economic turmoil,” said eMarketer senior analyst David Hallerman.

“To put the obvious into figures, online advertising contributes more and more to the total ad spending universe every year.”

“That share will be 7.4 per cent this year, approach one in ten dollars next year, and will likely reach at least 13 per cent by the end of 2011,” Mr Hallerman said.

The average ad spend per internet user is also growing, eMarketer reports.

In fact, 2007 marks the first year that marketers will spend more than US$100 to reach each person online. And, by 2011, advertisers will be spending nearly US$200 per user.

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Google-DoubleClick deal sweet: ACCC

THE Australian competition watchdog says Google’s planned US$3.1 billion (A$3.4 billion) acquisition of online advertising specialist DoubleClick will not have an adverse impact on the market.

After a months-long investigation, Australian Competition and Consumer Commission chairman Graeme Samuel said he would not intervene in the proposed acquisition.

“A key focus of the ACCC's investigation was whether the combination of Google's network of website publishers and DoubleClick's ad serving capabilities would enable the merged entity to increase the cost of ad serving to website publishers and advertisers,” Mr Samuel said.

“In reaching its decision, the ACCC noted that Google and DoubleClick are not close competitors in the provision of ad serving. In addition, the ACCC also took into account the presence of other competitors in this market that would be likely to constrain the merged entity post-merger,” he said.

“In this context, the ACCC considered that the merger was unlikely to result in a substantial lessening of competition in an Australian market.”

The Google-DoubleClick deal is being closely scrutinised by regulators in the US. Competitors like Microsoft and Yahoo say the acquisition will give Google too much power in the advertising market and will have an adverse affect on consumers.

The ACCC is continuing a separate investigation of Google’s AdWords product amid concerns the company contravenes the Trade Practices Act.

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Microsoft snares Facebook deal, expands advertising

MICROSOFT has scored a rare win over rival Google, snaring a small equity slice of the Facebook service in a US$240 million deal (A$263 million) that values the social networking phenomena at US$15 billion.

The deal gives Microsoft a tiny 1.6 per cent holding in Facebook.

More importantly, however, an expanded strategic alliance signed between the companies as part of the equity deal makes Microsoft the exclusive third-party advertising partner to Facebook.

Microsoft will also begin selling advertising for Facebook internationally on an exclusive basis, in addition to the United States.

“We are pleased to take our Microsoft partnership to the next level,” Facebook chief revenue officer Owen Van Natta said.

“We think this expanded relationship will allow Facebook to continue to innovate and grow as a technology leader and major player in social computing, as well as bring relevant advertising to nearly 50 million active users of Facebook.”

Microsoft Platforms & Services Division president Kevin Johnson said the two companies had partnered well together in the past year, and extending advertising opportunities would benefit both companies, as well as their collective users and advertisers.

“The opportunity to further collaborate as advertising partners is a big reason we have decided to take an equity stake, and is a strong statement of our confidence in the long-term economics of this partnership,” Mr Johnson said.

With about 50 million users worldwide, Facebook is one of the most trafficked web sites in the world, registering 250,000 new users every day – of which 60 per cent are outside the US.

In August last year, the companies announced a US-only strategic alliance that named Microsoft the exclusive provider of standard banner advertising on Facebook using Microsoft’s digital advertising solutions and the Microsoft adCenter platform.

In early 2007, the terms were extended to 2011. This arrangement now applies globally to all advertising.

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