Consolidation in digital advertising
Jinfo Blog

10th August 2009

By Udo Hohlfeld

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Publicis acquires Razorfish from Microsoft Microsoft acquired Aquantive for about $ 6 Billion in 2007. Part of this acquisition was also Razorfish, an advertising agency. This is actually not Microsoft's core business. Today the company announced to sell Razorfish, which is the number two in the market of online advertising, to the French Publicis, the number three in this market. Publicis is said to pay about $ 530 Million for Razorfish. For Publicis a great deal as it not only beat eight competitors (such as the British WPP or the Japanese Dentsu) but also as it strengthens its market position in the online advertising market - by the way, the only advertising market that still has positive growth rates. The market position is very important as the whole market will face a consolidation process in the near future. It is a very fragmented market with thousands of players, which each keep their own digital creative shop. In 2008 Razorfish generated $ 400 Million in revenues. And business will continue as part of the deal is Microsoft's commitment that Razorfish will be its preferred provider for the next five years. Tit for tat: Publicis will purchase displays and search advertising from Microsoft, thus strengthening Microsoft's Bing search engine. This is the next big push for Bing after the recently agreed search deal with Yahoo. It will be shown in the future if this deal with Publicis works out well as Publicis struck a similar deal with Google in 2008. Publicis is the world's third-largest advertising group with ad agencies such as Leo Burnett, Saatchi & Saatchi, media buyers Starcom MediaVest Group and ZenithOptimedia while in digital advertising it owns Digitas. Market value of the top three advertising companies ranked by revenues: WPP: market value of $ 9.82 Billion Omnicom Group: market value of $ 11.2 Billion Publicis: market value of $ 7.0 Billion References: Microsoft sells Razorfish for a Whopping $500+ Million - http://digbig.com/5badtx Publicis spends $530m to land Razorfish - http://digbig.com/5badty

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