Microsoft is shopping its digital ad agency Razorfish around to five major ad agency players, says Monday's Wall Street Journal.
The company hopes to strike a deal for Razorfish that would entice the right agency to use Microsoft's advertising technologies and buy ad space on Bing and other properties, according to the Journal. The move is seen as part of Microsoft's growing battle with Google and other Web sites for precious online ad dollars.
Citing executives familiar with the situation, the Journal said that top ad firms WPP, Omnicom Group, and Publicis Groupe have all expressed interest in Razorfish, while talks have also been held between Microsoft and agencies Interpublic Group and Dentsu.
Under the possible deal, the agency that wins Razorfish would agree to use Microsoft's digital ad services or buy space on search engine Bing, other Microsoft Web sites, and even on the Zune music player and Xbox game console.
Talks are likely to be delicate, says the Journal, since ad agencies don't want to appear too cozy with Microsoft as that might upset their role as neutral third parties. The winner could easily run into trouble trying to decide which search engine on which to buy ad space.
The cost for Razorfish may vary widely, says the Journal, from as low as $400 million to as high as hundreds of millions of dollars more, depending on the technology and ad-buying commitments.
The Journal also cited executives at two smaller ad agencies who said they contacted Microsoft about buying Razorfish but were rebuffed. According to them, Microsoft isn't looking to sell Razorfish to the highest bidder but rather to an agency with major industry clout and one that can spend big bucks on online ads.
Microsoft got custody of Razorfish in 2007 when it purchased Aquantive, which owned the agency then known as Avenue A Razorfish.
Since then, Razorfish, which employs 2,000 staffers and brought in about $400 million in sales last year, has acted both as a traditional ad agency and as Microsoft's arm. Razorfish has designed ad campaigns for such companies as Best Buy, Mercedes-Benz USA, and Mattel. The agency also created the logo and associated online ads for Bing.
Microsoft is putting Internet ad agency Razorfish up for sale, according to a Financial Times report Sunday.
Microsoft, which acquired Razorfish in 2007 as part of its $6 billion takeover of Aquantive, has reportedly hired Morgan Stanley to find a potential buyer. The report identified French marketing company Publicis Groupe as a potential buyer.
Formerly known as Avenue A/Razorfish, the agency was credited with designing the logo for Microsoft's new search engine Bing, as well as creating the online ads for the ensuing publicity campaign. The Seattle-based agency has more than 2,000 employees and counts Dell, Disney, and Nike among its clients.
One analyst cited in the FT.com report estimated Razorfish could be worth $600 million to $700 million.
Representatives for Microsoft and Razorfish did not immediately reply to requests for comment.
The deal for Aquantive was Microsoft's largest ever and highlighted the importance of supporting more-advanced advertising products and technologies across areas including media planning, video on demand, and Internet Protocol television. The acquisition of Razorfish specifically was considered especially important as a way to give Microsoft a new presence in the ad services business and also help promote its rich media and video plug-in Silverlight.
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