Today in Social

Back in 2007, Microsoft acquired aQuantive, a digital advertising company made up of roughly equal parts ad technology/ad network and digital agency services (Avenue A/Razorfish) for $6.3 billion in cash. At the time, Microsoft was over-reacting to Google’s purchase of DoubleClick (ad network and ad serving/targeting technologies), Yahoo’s purchase of the Right Media¬† exchange and WPP’s purchase of 24/7 Real Media (ad serving, targeting, yield management), all in the same month or so. Two years later, Microsoft sold Razorfish to Publicis, for about $500 million. Now Microsoft is writing down the goodwill of the acquisition in a $6.2 billion non-cash, non-tax deductible charge that will wipe out its quarterly earnings. This has almost nothing to do with Microsoft’s efforts in search. It has everything to do with Google’s and Facebook’s success in display advertising. It may have something to do with pulling together Yahoo and AOL, and perhaps bidding on Yahoo’s search technology, though Google may be prowling there. I still think Microsoft needs to be a player in digital advertising and search, because they’re such fundamental businesses in consumer and even B2B tech. But it’s struggling mightily.