Microsoft is pitching five big advertising agencies a deal to buy its Razorfish digital ad agency and to use Microsoft’s advertising technologies and possibly buy hundreds of millions of dollars of ad space across its Web properties, according to the Wall Street Journal.
Microsoft has pitched WPP, Omnicom Group, Publicis Group and two other large ad agencies on a deal to buy its digital ad agency Razorfish. Included in the deal is use of Microsoft’s advertising technologies and possibly purchase of hundreds of millions of dollars of ad space across the company’s Internet properties, according to a story in the Wall Street Journal.
Written by Emily Steel, the story says several of the five agencies are interested in Razorfish and are considering a more extensive commercial relationship with Microsoft. The software giant has also been in touch with Interpublic Group and Dentsu, and has hired Morgan Stanley to shop Razorfish.
The talks are the latest development in Microsoft’s quest to compete with Google and secure a firmer foothold in the advertising market, the story says. Under the deal, one of the ad companies would buy Razorfish, an agency with 2000 employees and about $400 million in revenue in 2008. Its clients include Best Buy, Mercedes-Benz USA and Mattel.
The deal could also include agreements to use Microsoft’s digital advertising services or to buy ad space across Microsoft’s digital properties, such Bing, its new search engine, and Web sites like Zune and Xbox.
Aligning too closely to Microsoft could pose a threat to a big advertising agency’s status as a neutral third party supposed to seek out the best deals for clients. The winning bidder could have a conflict of interest when choosing between search engines to buy ad time on, for instance.
WSJ Online subscribers may read the full story here.