Microsoft Could Sell Razorfish, Report Says

Microsoft may sell Razorfish, its online ad agency, and use Morgan Stanley to broker a deal, according to a report by the Financial Times. Microsoft originally purchased Razorfish as part of aQuantive in 2007 for $6 billion in a bid to expand its online advertising platform, an area in which the Windows maker has heavy competition from Google.

Microsoft will be selling Razorfish, its online ad agency, and using Morgan Stanley to find a suitable buyer, according to a June 29 report by the Financial Times.

When contacted by eWEEK, a Microsoft spokesperson had no comment about the matter.

The Financial Times report, which did not name its source for the information, also cited an analyst as estimating the value of Razorfish between $600 million and $700 million, "based on sales of about $400 [million] last year." Razorfish clients include McDonald's and Carnival Cruise Lines, among other big-ticket brands; Razorfish also reportedly crafted the logo for Bing, Microsoft's newest search engine competitor to Google and Yahoo.

One potential purchaser could be Publicis Groupe, a French marketing organization.

Microsoft originally paid $6 billion to acquire aQuantive, which owned what was then known as Avenue A Razorfish, back in 2007. In addition to Razorfish, aQuantive had other properties in its online advertising platform including Atlas, which offered tools for advertisers and publishers, and DrivePM, which matched ad campaigns to publisher inventor.

"The advertising industry is evolving and growing at an incredible pace, moving increasingly toward online and IP-served platforms, which dramatically increases the importance of software for this industry," Steve Ballmer, Microsoft CEO, said in a statement at the time of the deal.

The acquisition represented Microsoft's attempts to create an Internet-wide advertising platform, with the aQuantive tools being used to leverage digital marketing services to increase ROI for clients.

However, the online advertising market has been undergoing a massive shift of late, at least partially due to pressures exerted upon it by an economy in deep recession. While attending the Cannes Lions international advertising festival earlier in June, Scott Howe, corporate vice president of Microsoft's advertiser and publisher solutions group, suggested that mobile phone advertising would increase to 5 to 10 percent of worldwide media spending within five years.

Although mobile advertising would allow companies and marketing agencies to expand their brands even further, it would represent the sort of paradigm shift that would necessitate a change in strategy by many IT companies.

Microsoft finds itself in fierce competition against Google for search engine market share and online advertising dollars, even as the recession has hurt Microsoft's bottom line.