The deal clearly gives online marketing serious credibility - not only is it the latest in a slew of buys, but also the biggest in a sector where companies are looking to increase their digital media power.
Indeed, when you add it to recent acquisitions such as WPP’s buy of 24/7 Real Media, Yahoo’s purchase of Right Media for $680 million and Google’s acquisition of DoubleClick for $3.1 billion, it comes to a whopping $12.2 billion spent on acquisitions in the online advertising space in under six months.
But Microsoft’s land-grab has the industry on guard for another reason. For one, it puts the tech giant in the agency business, critically (and rather worryingly) giving it the power to shape the global media industry.
The problem is one of conflict. With its aQuantive acquisition, Microsoft brings digital agency Avenue A/Razorfish (whose clients in Asia include the likes of Nike and Coca-Cola through eCrusade Hong Kong) into its portfolio - essentially seeing the media seller become buyer as it acquires a company that spends big with key rivals such as Google.
The independence of an agency or media seller is critical to ensuring that a client’s budget is spent as efficiently as possible. But in a situation when a media seller owns an agency, are media placements being maximised or compromised?
For agencies too, it is likely to be a difficult relationship to tolerate; Atlas is a company that houses sensitive data from a range of agencies and clients. If Microsoft is going to convince marketers and agencies that this isn’t a case, as some believe, of the fox guarding the hen house, it will need to put in place strict policies that ensure media opportunities aren’t favoured to the parent company.
Just how easy - or even realistic - such a separation of the businesses will be remains to be seen.
Given the significant conflict issues at play, however, it has to be questioned whether Microsoft will, as it has publicly stated, hold on to and operate the Avenue A business.
It has, after all, always been a com-pany that develops and markets software and technology, not services. Raining on Microsoft’s parade are anxious Avenue staffers, who are already flooding blogs with concerns of just how far the creative agency business falls from Microsoft’s core competencies. Holding companies struggling to build their own interactive offerings must indeed be sniffing at the possibility of a spin-off of the highly rated digital marketing business. For agencies, there’s expected to be greater concern that third-party ad servers are no longer independent. Media agencies may now be forced to consider the development of their own ad serving technology or build such internal expertise through acquisitions.
Either way, it’s a costly exercise which few will be keen to invest in. It is also a situation that the industry will need to work together to resolve if trust in interactive advertising metrics and measured effectiveness is to be retained.
Hong Kong’s consumers aren’t the only ones confused over the Harvey Nichols brand. It appears the retailer too is perplexed as to how best to tackle its Asian challenges, reviewing its business just five months after appointing Bravo Asia. TBWA may fit the brand’s ‘edgy’ image - one that’s sadly failing to connect with local consumers, who are proving more partial to rival Lane Crawford - but its retail issues will remain.
Key of these is the inability to stock the kinds of brands favoured by its UK sister stores, leaving it with designers lesser known to Hong Kong consumers. Neither is its use of retail space helping draw in the type of spenders its after.