Microsoft to Buy Ad Exchange

July 26, 2007
By Brian Morrissey ADWEEK

Joe Doran

NEW YORK Microsoft has moved to fill out its digital ad platform through a deal to acquire Web ad exchange AdECN.

The acquisition brings Microsoft a stock market-like exchange in which ad networks bid for publisher inventory. The real-time auction system is meant to be a more efficient, transparent way to allocate ad space rather than publishers selling their extra ad space directly to networks.

Financial terms of the transaction were not disclosed. AdECN, based in Santa Barbara, Calif., has about 30 employees, the company said.

The move looks to set up ad exchanges at the top three Web ad sellers. Yahoo! earlier this month closed its $650 million acquisition of Right Media, which operates a similar exchange to AdECN. Google's $3.1 billion deal to acquire DoubleClick, which is building an ad exchange, is still pending approval.

AdECN attempts to create a more efficient mechanism for online ad networks to buy and sell ad space. Often, ad networks use redirects and other methods to complete campaigns because they lack the necessary inventory, while other networks have extra impressions, said Bill Urschel, CEO of AdECN.

"The industry has just matured and gotten to the point these independent deals are just too unwieldy and there were too many middlemen," he said.

Microsoft has made several moves to expand its presence in the online ad industry, where it has badly trailed Google in the key search market. In May, it inked a $6 billion deal to acquire aQuantive, which will bring it an ad server, ad network and interactive agency. It has moved to expand the reach of its adCenter platform by adding mobile ad network ScreenTonic. Yesterday, Microsoft also announced it would begin selling ads on Digg, a popular and fast-growing social media site.

"What it does is round out the rest of our platform and provide that central clearinghouse or exchange for our own ad networks to participate and other ad networks to participate," said Joe Doran, general manager of Microsoft's Digital Advertising Solutions unit.

Microsoft said it expects the transaction to close by the end of the year.