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AQuantive deal sets stage for Web video battle

Fri May 18, 2007

By Michele Gershberg

NEW YORK (Reuters) - Microsoft Corp.'s (MSFT.O: Quote, Profile, Research $6 billion deal to buy Internet marketing firm aQuantive Inc. (AQNT.O: Quote, Profile, Research puts the company in a position to play a bigger role in the nascent online video market and piles more pressure on competitors to make acquisitions of their own.

AQuantive will likely have fetched the largest price in a wave of online ad consolidation, but as many as eight more deals could come down the pike for smaller, niche ad plays, with a range of $300 million to $500 million, industry executives and experts said on Friday.

The deal caps a frenzy of online advertising acquisitions sparked when Google Inc.(GOOG.O: Quote, Profile, Research agreed to buy DoubleClick Inc. for $3.1 billion last month, followed by smaller purchases by Yahoo Inc. (YHOO.O: Quote, Profile, Research and marketing services company WPP Group

"It's really easy to look at it and say this was musical chairs. I don't think that's the case," said Dave Morgan, chairman and founder of interactive ad company Tacoda.

"Every single company is taking a step they have been looking at for years," Morgan told Reuters. "It was time to get serious because the valuations were going up a lot. It was pay now or miss the game."

At stake is a seat at the table in an advertising market dominated for decades by traditional broadcast television. Video entertainment will still be king, experts say, but they will be controlled by the Web for delivery to a set-top box, computer screen, iPod or mobile phone.

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