The Financial times reported last month that Microsoft has thrown its digital marketing agency Razorfish on the grill.  The Financial Times rumour names Morgan Stanley as the financial firm who has been appointed by Microsoft to find a buyer for Razorfish.  What makes this appear to be more of a fire sale is the low price the analyst is rumoured to have placed on Razorfish valuing the company at between $600-700 million dollars.

Microsoft paid $6 billion for aQuantive in May 2007, with a 2x premium on the shares previous days closing price. Some estimates on the purchase price and revenue figures calculated that it might take Microsoft around 15-30 years to recoup its investment in aQuantive. Based on this data and if Razorfish is valued at between $600-700 million this would signal more of a fire sale, so we thought that a link that might be suitable how to Cook Razorfish.

When Microsoft purchased aQuantive it included Razorfish and the Atlas Ad Platform with an original price carrying a 80% premium so this recent valuation rumour for Razorfish seems much too low for such a valuable company. Rumours are that parties reported to be in discussions to buy Razorfish is Publicis Groupe SA the world’s 4th largest marketing company.

The biggest points which show that Publicis Groupe SA might be the likely buyer is a recent agreement with Microsoft to establish a broad strategic agreement for digital. This broad agreement aims to ensure the companies can work closely on 3 core objectives: Content, Performance & Audience. Based around these core concepts they can work to bring better value and more efficacy to their clients and seek to potentially level the playing field with Google.

Razorfish is a very successful digital marketing agencies which according to its Wikipedia page in 2008 alone, Razorfish has won over 75 creative awards including 10 Webbys, 16 WebAwards, 3 OMMAs, 2 ADDYs, and 3 Create Awards. Razorfish is also quite a large digital agency with over 2,000 employees worldwide and working with a majority of the worlds largest 500 companies.

The potential benefit to the buyer of Razorfish is a massive client roll, exclusive technology and a powerful brand which is likely to be worth more than $600-700 million for an agency such as Publicis Groupe SA. If this sales rumour turns out to be true it is likely even in these tough funding climate to start a bidding war as the only growth seems to be in digital.  Sir Martin of WPP recently outlined that their digital is around 25% of their business and they are expanding their digital offering considerably throughout the world, which could be assisted by a purchase such as Razorfish.

The other bigger global agencies besides Publicis Groupe SA which are likely to want a piece of Razorfish are: WPP, Omnicom, Interpublic who could benefit from an increased number of higher growth digital projects.

We have listed some of the manyRazorfish client projects:
Automotive
* Ford – Ford Sync
* Honda Formula One – My Earth Dream
* Mercedes – Mercedes-AMG
* Audi – A4 Global Drives
Consumer Goods
* Coca-Cola – iCoke & World Cup Campaign
* Coors – 4:53 Silver Bullet
* Krafts – Chips Ahoy
* L’Oreal – Garnier Nutritioniste
* Red Bull – Red Bull Fusion
Financial Services
* Visa – Visa Discounts
Healthcare & Life Sciences
* Roche – FluFacts.com
Media & Entertainment
* CNN – Cnn.com
* Conde Nast – Concierge.com
* Netflix – Instant Viewing Player
* Nielsen Media Research – NielsenMedia.com
* Sony – Playstation Portable
* New York Times – NewYorkTimes.com
Retail
* JCPenney – Ambrielle
* Levi Strauss & Co – Levi’s RedWire DLX
Technology & Telecom
* AT&T – Digital Lifestyle Center
* Microsoft – Xbox
* TED – Encyclopedia of Life & Pangea Day
Travel & Leisure
* Northwest Airlines – NWA.com
* Startwood Hotels – Global Search Website

If you want to learn more about Razorfish follow them on twitter.

Update NYTimes confirms that Publicis Groupe purchased Razorfish for $530 million in stock and cash, who will continue to advertise on MSN & Bing as part of a 5 year deal.  Microsoft also confirmed it will continue to spend money with Razorfish as part of the deal.

On Friday, Forrester Research published its Forrester Wave™, Interactive Marketing Agencies – Web Design Capabilities, Q2, 2009. Ascentium was covered for the first time along with other top digital agencies including Sapient, imc2, Razorfish, IconNicholson, IBM Interactive, Organic, Blast Radius, iCrossing, OgilvyInteractive, Resource Interactive, and Rosetta, Critical Mass, Molecular, R/GA, VML, Whittmanhart and Arc Worldwide.

In addition to just being favorably reviewed among such a great group an agencies, we take pride in that Ascentium scored the highest out of all the agencies in the category or customer satisfaction. We credit that in large part to emphasis we have given to growing customer loyalty and constantly measuring it with tools like Net Promoter Scores.

When I joined Ascentium almost four years ago, we were primarily a technology consulting firm with strong Web development skills and some good design talent, but we hadn’t yet made the commitment to become a true full service digital agency. But we got together as a team and agreed that the future was in leveraging technology to advance marketing and to move from advertising to engagement.

Three years and a roster of blue chip clients like Microsoft T-Mobile, Dell, Cisco and Random House, later. We have garnered the attention of the likes of Forrester Research and have grown from a local Seattle-based firm to an agency with offices across the country and internationally as well.

It’s been a privilege to be a part of this journey and to have helped nurture it along the way. It wasn’t always easy teaching technologists and marketers to not only get along, but to actually work synergistically, to create a new model for what Forrester has called, the agency of the future.

So congratulations to all the other agencies featured in the Wave, thanks to all the analysts at Forrester who have seen value in what we’ve created and well done to each and every employee I have the privilege of working with at Ascentium. Just wait for what we have in store for you next.

I just read a few minutes ago that Razorfish, one of the top digital agencies, and one my company, Ascentium’s, chief competitors, announced layoffs of 70 people. This is hours after I heard about Crispin, Porter, & Bugusky, one of the brightest shining stars in the advertising agency world, and a partner of Ascentium, announced layoffs of 60 people this morning. Both companies are considered at the top of the industry. Both excel at creative ideas, well-executed and yet both are taking pretty big hits on the same day. And personally, I know people at both companies from our work together at Microsoft. So what does this mean?

The deep answer is I don’t know yet, but it will make me take a look in the mirror and make sure I’m doing everything at my company so that we don’t suffer the same fate. However the more immediate answer is that this sends a clear signal about the progression of this economic downturn. When good companies make cuts, it’s a sure sign that even in the new digital world of marketing, most of the fat must already be gone, because the industry is cutting into the muscle.
My heart goes out to everyone at these two organizations who is out of a job. They say it’s not personal, it’s just business, but having personally been on both sides of the axe. It’s a lot more personal if you’re the one without a job. Good luck to everyone and let’s hope for the change sooner rather than later.

Roughly, every year, the software giant buys about 20 companies which equates to about $9 billion. The acquisitions range anywhere from $10-20 million to a few hundred million dollars each. But as Microsoft CEO explains, this year was a very active one for larger transactions, like aQuantive and Fast being over a billion dollars or Danger and TellMe, over $500 million each.

But unlike 6-7 years ago, when a very high percentage of everything Microsoft looked and bought was actually in the Silicon Valley, today it is just “a high percentage”.

“Not all the great work gets done in Silicon Valley. I know it’s a little bit of a tough message for this crowd… We probably bought 10 companies in Israel, 4-5 companies in France”, said Ballmer.

Here’s a video excerpt where Ballmer talks about Microsoft’s merger and acquisition strategy:

If it’s good enough for Google Suggest — Google has recently announced that they their AdManager has moved from private beta to a public release. AdManager is aimed at publishers with small direct sales teams. It includes some nice features out of the box, mostly focussed on tracking directly sold and network-based inventory, then enabling the sale, measurement and provisioning of this. Naturally, there is tight integration with AdSense and multi-lingual support is excellent. There is also reasonable third party network integration. Some of the time in beta testing has led to new features such as time dependent rollout and previewing of ads. A sophisticated inventory management and provisoning system like this is no small investment and it’s a classic Google move to make it free to level the playing field — or to raise the competitive moat to monopoly level, depending on how you look at it. In this case, existing competition gives away its software to advertisers, and makes money, just like Google does, from the advertisers.

It seems unlikely for competition like UK-based OpenAds (now called OpenX) to be running scared. With chairing by former AOL head Jonathan Miller, more than $20 million in backing and an impressive roster of customer names, OpenX may be just looking to take their 30,000 customers into the arms of a competitor. However, Microsoft got hold of Atlas when it acquired aQuantive, so why it would want OpenX is anyone’s guess.

Note that AdManager is fully hosted and a closed proprietary system, unlike OpenX which allows its publishers to host it and to extend its PHP code base. OpenX’s CTO, Scott Switzer has also pointed out that a good number of publishers may not want to add another piece in the Google monopoly puzzle. On the flip side, many small publishers may love the ease of how  software-as-a-service enables them to get live quickly.

Microsoft Considers Unloading aQuantive’s Avenue A/Razorfish To WPP; Possible Price: $800MM — Microsoft’s talks with WPP Group seem to be taking a more serious turn on the subject of the software giant selling off digital ad shop, Avenue A/Razorfish, AdAge reports. Microsoft acquired Avenue A/Razorfish when it bought parent aQuantive last August for about $6 billion. That purchase also included other aQuantive properties, among them ad network Atlas and digital marketing solutions provider DrivePM. Initially, Microsoft felt the online agency business represented by Avenue A/Razorfish was fairly ancillary to creating an online ad platform that would compete with Google and DoubleClick. But Brian McAndrews, at the time aQuantive’s CEO and now SVP for Microsoft’s Advertiser and Publisher Solutions Group, convinced Microsoft to accept the unit whole. Six months in, however, Microsoft began having a change of heart and looked for potential buyers who might be more interested in taking the agency business. So far, the main prospect has been WPP CEO Sir Martin Sorrell.

LA Times Group Joins In Launching Real Estate Auction Buiness and Site ZetaBid — As the print side keeps bleeding, the Los Angeles Times Media Group keeps trying to extend into other platforms, both offline and online: the parent of LAT newspaper has jointly launched ZetaBid, a business that will auction foreclosed homes and other properties…it also has a website where the properties could be viewed. The newspaper has nothing to do with the new business, reports the newspaper. The other partners are London-based GoIndustry-DoveBid, an auction specialist, and CataList Homes of Hermosa Beach, a real estate brokerage. The partners will share fees paid by the buyer on each home sold. Bob Bellack, who is president of digital media, classified and development for Times Media Group, will be chairman of the new enterprise. This is an innovative idea of expanding its commercial opportunities, and though the real estate market is on doldrums, the foreclosure market as a result is not.

Yahoo Seeks To Expand Yahoo News — Yahoo is aiming to turn Yahoo News into a major news organization, a la Reuters or The Associated Press. According to AFP, the Web giant is moving away from aggregating others’ news content and is instead cutting deals with wire services and investing heavily in its own roster of reporters. “We have been doing a lot of original reporting and we are going to be doing a lot more,” director of editorial programming Jessica Barron told AFP in an interview. Yahoo News already reaches about half a billion people worldwide. “Our aim is to reach these bigger names and use our reporting talent to break news,” Barron said. “We are really going for the kinds of questions that will make news.” For the Democratic and Republican party conventions, Yahoo is teaming with Politico reporters to cover the event; the team will field questions on behalf of Yahoo’s users and relay the answers online.

Harbinger & Co. Unlikely To Shake Things Up At Cablevision — Whoever said talk was cheap hasn’t been following the action at Cablevision: Shares of the Long Island-based cable operators have staged a strong rally in recent months, courtesy of the Dolan family’s jib-jabbing and jawboning alone. But don’t expect the fun to continue says Citi analyst Jason Bazinet, who downgraded the stock today. Despite the fact that activist Harbinger has taken an 8.1 percent stake in the company, class A shareholders (non-Dolans) don’t have the muscle to force anything, like an asset sale. Even though the top non-Dolan shareholders are consolidating their grip (besides Harbinger, top firms like Gamco and Clearbride have added to their stake), the Dolan’s control of the Class B shares ensures that they’ll retain 73 percent of the voting power.

Telemundo Unifies Digital Media Division; Blacker As SVP — Telemundo, the Hispanic language media company owned by NBC Universal, has unified all its digital media efforts and created a new unit called Digital Media and Emerging Businesses Division. This new unit will include Yahoo (NSDQ: YHOO) Telemundo, holamun2.com, its international digital media efforts and its emerging platforms unit (which included mobile and licensing and merchandising efforts). It will be headed by Peter Blacker as EVP, who was previously SVP. He joined NBCU after a stint as VP, Multicultural & International for AOL Media Networks. The mandate of the new unit is to develop custom branded entertainment, digital and mobile cross-platform solutions.

As someone who follows the digital agency world very closely, and the former CEO of an agency that once was in talks with Avenue A about an acquisition – my hats (because I wear multiple of course) go off to the agency for becoming the recipe of legend. After arguably becoming the most powerful stand alone digital media agency, developing what is now the second largest ad server in the industry, building a behavioral targeting network, creating a holding company (aQuantive) , and acquiring Razorfish (and a few smaller shops that everyone seems to have forgot already – remember i-Frontier?), and eventually getting acquired by Microsoft – Avenue A has basically accomplished what no other digital agency has and secretly wished for.

An acquisition of Avenue A by WPP would be a huge boon for the holding company, albeit would damage a lot of egos and create an awkward totem pole within GroupM. In the grand scheme of things however, this deal would help secure WPP’s positioning as the digital powerhouse among the agency networks, providing a significant boost in both scale and talent.

The potential deal would actually be an interesting structure, considering that Microsoft overpaid for the agency in the first place.

According to Ad Age:

Consider that in May 2007 Microsoft dropped $5.9 billion for aQuantive’s three businesses: Atlas, DrivePM and Avenue A. The deal was completed last August. While Microsoft was primarily interested in the first two businesses to help build out a massive ad platform, the latter accounted for 60% of aQuantive’s revenue. While $3.5 billion — 60% of $5.9 billion — isn’t necessarily indicative of Avenue A’s valuation in the Microsoft-aQuantive deal, there’s no way Microsoft would get even close to that for the shop. That figure approaches the market cap of WPP rival Interpublic Group of Cos. ($4.4 billion), and WPP’s own market cap is $10.7 billion. Selling Avenue A for market value would only highlight how much Microsoft overpaid for the No. 2 player in the ad-serving space. (Weeks before the Microsoft deal, the No. 1 player, DoubleClick, was snapped up by Google for $3.1 billion.)

According to the Ad Age article and people familiar with the discussions: Microsoft may “unload” the agency in exchange for a WPP package that would include 24/7’s Open AdStream publisher ad-serving tool plus cash.

Exciting times…

I have to admit that I love watching the Microsoft, Yahoo, and AOL saga unfold.  What is of peculiar interest to me is the number of industry analysts, pundits, and writers that seem to know absolutely nothing about technology, let alone business, that continue to write absurd articles about the validity of a Microsoft merger.  Outside of Carl Icahn’s arguments regarding shareholder value, does a Microsoft acquisition of Yahoo make any sense?

Yahoo’s strength lies more within their portal and less within their search and advertisement placements.  A fact that Yahoo themselves have recognized via their proposed link with Google AdSense.  As a destination, Yahoo is “first-rate” with limited competition.  From Yahoo News and Finance, to Instant Messaging and Email, Yahoo is a truly a remarkable destination.  However, their search and advertising business leaves a lot to be desired.

Back-in-the-day, Google became a giant by having relevant search with limited advertising.  In fact, Google’s search was so accurate that while employed by Inktomi, a rival to Google, many of us used it instead of our own search technology.  Google’s genius was creating a revenue platform around their search technology that continues to generate billions of dollars a year.  Yahoo tried to counter Google’s superior technology by purchasing both Inktomi and Overture.  Sadly, history won’t be kind to either of those decisions.

Examining Microsoft yields many concrete comparisons to Yahoo.  Microsoft is a decent portal destination with a wide array of on-line services.  However, their search and advertisement placements are horrible.  Microsoft attempted to correct the situation by engaging in a massive engineering and development effort culminating with the launch of a “new” search engine and purchasing aQuantive.  However, neither of these moves has made a dent in Google’s armor.

Simply put, Google’s search experience is superior to both Microsoft and Yahoo.  It’s clean, fairly relevant (getting worse), and extremely useable.  Additionally, Google’s AdSense and accompanying management tools are miles ahead of both Yahoo and Microsoft.  Therefore, why does a Microsoft and Yahoo acquisition make sense?

Combining Microsoft and Yahoo’s sub-par search engine technology is complicated and the results are sure to be uninspiring.  Furthermore, the same can be said of a combination of their respective advertising systems.  Unfortunately, this is not a math problem and the combination of these units does not equate to generating long term revenue success.  How hard is it to switch from Yahoo to Google or Microsoft to Google advertising? 

Have we forgotten that Microsoft maintains a healthy business that is growing revenues and continues to compete across multiple markets?  They have billions of cash in the bank with billions more arriving every year on the heels of new and updated products that are beginning to hit the market.  The perceived and overblown rivalry between Google and Microsoft is ridiculous.  Google needs more products, new ideas, and years of prolonged growth to even get into Microsoft’s league (I’ll leave that to another article).

While a combination of Microsoft and Yahoo would surely line the pockets of large institutional investors, investment banks, M&A advisors, and Carl Icahn himself, it only makes sense if their intent is to combine the portals and ditch the rest.  Based on Microsoft’s latest offer and Icahn’s stated plans,  this acquisition makes no sense.

AdTech. It’s new–at least in the America. It’s a German company that’s popular throughout Europe and it’s got Gannett (and its corporate parent, AOL)as its first big client. So you better pay attention. AOL currently uses AdTech to serve half of their ads and it’s only a matter of time before the rest gets served.

Now that AOL’s not so dependent on Google, what will that mean? With all these ad serving marriages like the Google-Doubleclick, Microsoft-aQuantive, and WPP-24/7 Real Media ad serving marriage, Gannett-AdTech will definitely be one to watch out for.

Jim Barnett is co-founder and CEO of Turn, a three-year-old online advertising firm that uses an eBay-like auction to improve the way advertisers are matched to web publishers. Previously, Jim was president of AltaVista, and later, of Overture’s search division, which Yahoo bought for $1.6 billion in 2003. Jim talks to us about why he finally became a founder, why bootstrapping is not always the answer, and why sometimes co-founders need to part ways.

F|R: When did you first get the startup bug?

Barnett: Unlike some of your contributors, I’m a serial CEO. Historically, my passion and expertise has been taking entrepreneurial companies and scaling them into professionally-run companies. I did that with several companies, but ever since I was a kid I wanted to run a company from scratch.

F|R: Many founders find themselves in David vs. Goliath contests. Conventional wisdom is the only way to win is with superior technology. Turn is in a space dominated by DoubleClick, aQuantive, Advertising.com and Google. How do you compete?

Barnett: The Internet space doesn’t require you to have dramatically better technology, but there is no question that you have to be exponentially better at something. It might be technology, or maybe just a better product strategy.

In the ad space it depends on what part of the market you’re going after. Better technology is Turn’s approach because we’re going after the broad, more developed market in display advertising – it’s worth $30 billion now, and growing 20 percent annually. If you’re going after emerging categories, like mobile or video advertising, a lot of innovation comes from strategy; it is not necessarily a requirement to have better technology. Personally, I like to attack mature markets because even a small piece of a big market can lead to a big company, and I always want the vision of a big company. But for most startups, pursuing an emerging market where there is not an entrenched Goliath is a better path. So it’s about finding a new market (eBay, Yahoo, Netflix), a different product (Facebook) or simply a better product (Google).

F|R: Many of our founders are fond of bootstrapping. You’ve raised $22.5 million in venture capital for Turn. Why was this necessary?

Barnett: Bootstrapping is a fine strategy for consumer applications that don’t require deep technology or where a lot of your technology will be off-the-shelf. At Turn, we had to build both a team of PhDs focused on ad-selection algorithms and a best-in-class ad serving platform. It was capital-intensive. Whether you bootstrap or not, keeping your staff small until you get it right is absolutely the right thing to do. The truth is most startups struggle. Very few open their doors and experience life “up and to the right” every day afterwards. Often you have to evolve your strategy midstream, and that almost always requires tremendous persistence and time. We changed our strategy at Turn. If you don’t have capital, you won’t have the time to get it right. Selling equity to get some runway is the right thing to do.

F|R: How did Turn evolve its strategy from Plan A to Plan B and why?

Barnett: When we started we were focused on the long tail in advertising, but around year two, we changed our strategy to focus on larger advertisers and publishers. The problem with the long tail is that it’s the tail, it’s not the heart or the body…it’s not where the mass is. Our service is about aligning advertisers’ needs with publishers’ needs. Higher-quality advertisers want to be on higher-quality publishers and vice versa. The long tail gets a lot of visibility, but the real tonnage in terms of users and revenue is with the larger players.

F|R: Was this change difficult? What consequences did it have on Turn?

Barnett: Initially I had a co-founder at Turn. He’s a brilliant technologist, and he focused really deeply on our technology. But at a certain point I wanted to aggressively move to our new strategy and he had different opinions. So we parted ways. The lesson there is sometimes you have to make a change for change’s sake.

F|R: How do you know when change for the sake of change is what’s needed?

Barnett: You don’t know — you’ve got to trust your instincts. Most of the time there is no proven path, particularly if you’re in an emerging space. You want a collaborative environment, but at critical junctures most organizations ultimately need one leader to make the call, to stand up and say, “Nope, this is what we’re doing and here’s why…” That’s what good CEOs need to do.

Today I saw in a news story that Microsoft is testing a new tool that is called ‘Engagement ROI’. This tool, developed by aQuantive’s Atlas unit, is supposed to measure the all the ways in which buyers interact with a company’s online adverts until the point when they eventually buy something. Basically, Microsoft says that focusing on clicks is not the whole story and the fact that website visitors are actually not clicking on ads doesn’t mean that adverts don’t work.

Ok. This is fascinating. Let’s take a step back and think this through. What do adverts actually do?

Let’s say, I am reading a magazine or watching TV. I will see 100s of ads in both instances. However, I only know a few types of ads that will spur me into action directly. Examples might be:

• Special offers/discounts
• Limit period products/promotions
• Job adverts

Essentially, these are all the adverts that indicate that something is only available for a short period of time. The message is: this is a great deal, if you don’t act now, you will miss the window of opportunity. Dell’s computer adverts are a good example for this style of advertising. They constantly give you the feeling that if you don’t buy the computer now, you will loose out.

All other adverts, I ignore. Or do I? Certainly, they don’t spur me into action. But there is one thing that they do: they position a product in my mental map. This means a couple of things. It means that when I am actually looking for something, I might remember this product and consider it in my purchase decision or give it a higher consideration. If this product is positioned well, I might be prepared to pay more for the product than it is worth objectively. Also, once I have bought a more expensive product, I will also enjoy it more than if the product had been cheaper. Here is a good story about how the perception of price changes experience.

So, what does that mean? In the vast number of circumstances, advertising has the potential to:

• Increase probability that user will buy a product
• Increase price users are prepared to pay
• Increases satisfaction with product, leading to more recommendations, and repeat sales of these products.

I guess what Microsoft is saying is that they want to measure these effects. This is, in theory, a very interesting idea.

So, here is the trick. I was in science a little while back. One thing that I remember very clearly is that when you are measuring an experiment, you need two sets of data. The data set of your experiment and a control data set. You draw conclusions based on the comparison of these two data sets. Ideally, you also have a positive control, so you know what the results look like, when the experiment works.

What I don’t understand is how Microsoft wants to establish the control data sets in these circumstances. I guess it is possible to figure out who has actually looked at which ads online. But how do you know who hasn’t? How do you measure overlap with offline advertising?

I am looking forward to seeing the answer later this year.

NOVA YORK (Reuters) – A Microsoft afirmou nesta segunda-feira que vai testar uma nova maneira de medir a efetividade de um anúncio publicado na Internet em um desafio ao padrão da indústria que ajudou empresas como o Google.

O “Engage Mapping” deve começar a ser testado em 1o de março e se diferencia do padrão que vincula vendas, interesse de compra e tráfego para o último anúncio que o usuário clicou online. Em vez disso, o sistema proposto tenta levar em consideração todas as interações de Internet que levaram o consumidor a comprar um produto.

A nova iniciativa da Microsoft segue-se à compra pela empresa da companhia de marketing aQuantive por 6 bilhões de dólares no ano passado, em um esforço para faturar com o crescente mercado de publicidade online e melhor competir contra o Google.

A Microsoft ainda está envolvida numa tentativa de aquisição do Yahoo, com proposta não solicitada equivalente a 41 bilhões de dólares.

“O ‘último clique’ é uma aproximação defasada e falha porque essencialmente ignora todas as interações anteriores que o consumidor teve com a mensagem do anunciante”, disse Brian McAndrews, vice-presidente sênior da unidade de propaganda e soluções editoriais da Microsoft.

Mais

…or so wrote Marc Andreessen, on his blog Monday.

Pundits have bemoaned the impact that Microsoft’s acquisition of Yahoo will have on Silicon Valley entrepreneurship: In eliminating a “big startup acquirer,” Redmond is slamming shut one, and possibly two, big windows for “VC-funded exits.” You’ll be happy to know that Marc vociferously disagrees…

I think that a Microsoft/Yahoo merger would have practically no impact on any high-quality Silicon Valley startup.

For starters, Marc argues that Yahoo, Microsoft and even Google haven’t been as acquisitive as VCs or entrepreneurs wax on about. Apart from a few huge deals (Microsoft’s aQuantive deal, or Google’s Doubleclick and Postini purchases) all three companies have mainly done a “small number of very small deals” to acquire engineers or products that weren’t even complete.

“[These are] not doubles or triples or even necessarily singles from the perspective of venture-funded Valley startups [so] taking Yahoo, or even Microsoft for that matter, out of the M&A races isn’t going to reduce the number of deals going down each year by very much.”

Translation: don’t worry. And now check out Marc’s giant list of all the other active players in Internet M&A — other potential partners for you to court , should Yahoo and Microsoft get lost in the weeds of their integration and become even less “active” (very likely, should the deal fly!):

* Akamai
* Amazon
* American Greetings
* AOL
* CBS
* Cisco
* CNet
* Comcast
* Digital River
* Disney
* eBay
* Expedia
* HP
* IAC
* Jupiter Media
* Liberty Media
* Marchex
* MercadoLibre
* Monster
* Motricity
* NBC Universal
* New York Times
* News Corp
* Omniture
* Priceline
* Publicis
* Real
* Sabre
* Scripps
* Shutterfly
* Sony
* Valueclick
* Viacom
* WPP

I woke up today wishing I never sold me Yahoo stock. Microsoft made a $44 billion dollar bid to acquire Yahoo, the equivalent of  a 60%+ premium over the current share price. Ok, reflecting on my day trading days aside – this is a huge announcement!

Should the deal be accepted and pass FTC regulatory scrutiny, the combined entity of Microsoft (which has strengthened its position significantly since the groundbreaking aQuantive acquisition last year)  and Yahoo, would rival Google in a way that neither would have ever been able to achieve alone at this point.

I’ve been predicting that Microsoft is as much a player to look out for as Google is, in the age of “coopetition” and “frienemies”. In my ‘Agency Darwinism’ piece from weeks ago, I point out that lately WPP chief Martin Sorel has mentioned Google more than his direct competitors like Publicis, IPG, & Omnicom. I pointed out that Microsoft should be looked at equally as seriously, and wouldn’t you know it, 2 weeks later the industry is already moving in its next hyper evolutionary state.

This is a new era we are entering once again…

Mediapost today ran a statement from former aQuantive CEO Brian McAndrews, it’s a good read.

Ever since rolling out the “proprietary Avenue A” ad-server (now known as Atlas), the aQuantive team has always been very aggressive about progressing the delivery and measurement of ads. After all, they did manage to become the #2 ad-server and were acquired by Microsoft for $6 billion. Their Mom’s are proud, trust me. They have had a commitment to cracking emerging platforms over the last several years. Microsoft is rolling out an ad delivery systems tied to RFID driven digital shopping carts in Shop Rite supermarkets is tied to a relationship marketing program, which now has the ability to trigger based behavioral targeting of offers in-store. I would assume the RFID also acts as a sort of in-store GPS to trigger ads as well, and maybe seconds as an anti-theft device. If Shop Rite moves to an RFID standard for their goods and suppliers they can also cut down supply chain costs considerably. Very cool.

The AP report states that the aQuantive acquisition “shored up the company’s capacity to serve video ads onto these grocery cart screens”. The acquisition and selective recruiting also helped Microsoft score some major human brain power in the last few years. I know a few folks at Microsoft who have been around the block a few times and really are some of the brightest people in the industry. Congratulations guys. Create some momentum with this, it’s just the beginning!

While we were looking for convergence in the form of IPTV for years, it has slowly been happening all around us in so many other shapes and forms. Digital channels and platforms such as SMS allow for the activation of otherwise passive media…and since everything is media, everything is up for grabs.

According to an eye-opening wrap-up by Ad Age, this was a banner year for M&A activity in interactive advertising and marketing. Somehow, between my clients changing strategies and my kids outgrowing their clothes every two weeks and my TiVo obsession and SimCity Societies and the occasional need to sleep, many of these deals passed me by. (If you’re really into this kind of thing, check out the full list here.) All told, it seems I missed some important stuff.

Among the most consequential deals was the still-pending Google-DoubleClick acquisition. Without a doubt, Google (GOOG)  plus DoubleClick (DCLK)  is a scary powerful combo–and blasts Google out of its search-driven prison. Another head-turner is the mega-deal in which Microsoft (MSFT) acquired marketing services firm aQuantive (AQNT) for $6 billion. I’d say MS has finally admitted that it can’t dominate a freewheeling industry like new media, particularly given that it hasn’t got a Windows-like captive audience base to exploit.

Will another handful of big deals pop up in ‘08? Seems likely, particularly among ad networks (consolidation afoot), and by international investors leveraging a weak dollar, Ad Age’s Abby Klaassen says. Another interesting takeaway for me was that she expects Web analytics to be red-hot (though it’s not a big surprise, given that there’s only a few real winners in the space). All told, looks like another drama-filled year for i-marketing is on the way.