Microsoft has landed Viacom as a major online ad customer for its Atlas AdManager platform in the United States and managed to license the media giant's short-form television and theatrical content from MTV, Comedy Central, BET and Paramount Pictures, for MSN and Xbox 360.
Microsoft will also buy advertising on Viacom broadcast and online networks and the companies will work together on promotions and sponsorships for MTV Networks and BET Networks award shows.
Microsoft says the five-year deal is in the ballpark of $500 million. For Microsoft, I say it's quite a deal to close before the new year. For Google, I say it's one that got away.
Here's the interesting part: Viacom dumped DoubleClick, which Google is fighting an uphill battle to buy for $3.1 billion, for Microsoft.
Note that Viacom has sued Google's YouTube property for copyright infringement because it shows so much of the media company's content without permission. This is a BIG suit, $1 billion.
Clearly Viacom isn't thrilled with YouTube, and by extension, Google. Microsoft, thanks to the graphical and video ads capabilities in its Atlas platform from the $6 billion aQuantive purchase, is reaping the rewards. This all makes perfect business sense.
However, I laughed when I read comments from a Google spokesman that the deal proves the market can remain competitive even if Google were to successfully buy DoubleClick.
Well, sure. If you tick off a company by providing its content gratis (or enabling it -- it's really the same thing) it's not going to want to let you place its ads. Why would Viacom go with Google if it had other options?
If Viacom and YouTube had settled the suit, I'd say sure, but the fact is Google bought YouTube AFTER the suit was filed. Viacom can take that to mean Google doesn't care that YouTube is infringing on its copyrighted content and believes it will win in court.
It will be interesting to see how whether the infringement suit gets settled or goes to court, with Microsoft cheering Viacom from their corner.
Congress will (one would hope) recognize Viacom's Google bias, and I think, won't let it affect its thinking on Google-DoubleClick. However, its may be all moot; the word is that the deal is going to pass muster even though the guys on Capitol Hill don't have a clue how this market works.*
If I'm Google, I'd want to be careful about using Microsoft-Viacom marriage as evidence of fair competition, and if I'm Microsoft, I wouldn't be overly ecstatic. The deal only proves that Viacom and Google just don't mesh.
Absent in all of this is a discussion on how Atlas is better than Google's AdSense. Viacom CEO Phillipe Dauman only said "Microsoft's business plans complement our strategic objectives." Sticking it to Google-YouTube is on of them
But for every Viacom, Google answers with an AOL, Ask.com or a MySpace, so I'm not too impressed, yet. Microsoft needs to do more in online ads in 2008 and Google will have to defend its turf. How Microsoft-Viacom will affect Google in the long run is unclear, but for now it's just a big drop in a big online ad bucket.
UPDATE: Shortly after posting this, the FTC gave the deal the green light.