Microsoft (MSN) adCenter adds ad technology

Microsoft’s latest acquisition of ad technology firm Rapt follows on the heels of Google formally closing its DoubleClick acquisition, underscoring the search giant’s own ambitious push into display advertising. The ad technology deal strengthens Microsoft adCenter’s (formerly MSN adCenter) set of ad business tools for Web advertisers and publishers.

Microsoft and Yahoo!

Executives of Yahoo and Microsoft had met last week to discuss Microsoft’s proposed takeover of the Web portal. Yahoo’s board in February rejected Microsoft’s bid, valued today at about $42 billion.

Microsoft and digital advertising

The move signals Microsoft’s ongoing push into digital advertising, highlighted most dramatically through its $6 billion purchase of aQuantive last year. Most recently, Microsoft snapped up Israeli startup YaData, whose technology is designed to help advertisers find original customer segments online. The move “puts us way ahead of what other offerings are available in the market,” Howe said in an interview, likening Microsoft plus Rapt to a jet plane — and competitors, including Google Inc., to a bicycle.

Microsoft, for its part, is waiting for Yahoo Inc. to respond to its unsolicited $42-billion buyout offer, which it hopes will help it catch Google in the search ad business.

Rapt’s Future

Rapt has 85 employees and is led by Tom Chavez, who will join Microsoft plans to remain in California. The comppny will become part of Microsoft’s Atlas suite of services for publishers. Rapt’s technology will provide advertising yield and management solutions for users of Microsoft’s Atlas Publisher Suite. The company says it makes the buying and selling of media easier across its network and other participating companies. APS includes Microsoft’s ad properties, including Microsoft adCenter, Atlas, DRIVEpm, Massive Inc. and ScreenTonic — as well as technologies it acquired from its buy of aQuantive.

Rapt’s Technology

Rapt’s “yield management” software helps publishers adjust pricing and inventory for display advertising based on changes in demand. Rapt’s system could be equated to the system that airlines use to set prices and track available seats, says Microsoft. The Redmond company had already been using Rapt’s technology on its MSN network, and it said it saw ad revenue increase by up to 20 percent.

One of the key products that will be offered as a result of the Rapt buy would be an integrated sales workflow solution, which would help sales teams manage ad inventories on top of an Atlas ad serving platform. Scott Howe, a general manager in Microsoft’s Advertiser and Publisher Solutions Group said that the merger would “redefine the ‘table stakes’ for what media publishers in today’s market need to effectively monetize their advertising inventory.”

In addition to its publisher tools, the company also recently launched Rapt Information Services, a research offering for advertisers and agencies. Microsoft hopes the acquisition will add momentum to its publisher tools business. Howe boasted that since Microsoft’s acquisition of aQuantive it won 70 publisher clients, many at the expense of DoubleClick. The technology gives Publicis and other agencies a dashboard-like tool to look across the inventory and pricing strategies of various media sellers they’re negotiating with. Other Rapt clients include CNET Networks, Dow Jones & Company, Fox Interactive Media and MTV Networks.

Display advertising and Google

Display advertising hasn’t gotten as much attention as search ads, thanks to Google’s unparalleled ability to turn search queries into billions of dollars in revenue. The acquisition intensifies the growing competition between Google and Microsoft, as both seek to offer an array of tools (from ad serving, campaign management and ad exchanges and networks) to buyers and sellers of digital advertising. Google, of course, significantly bolstered its standing this week when it completed its acquisition of DoubleClick. But that may be about to change with Google’s first big push this week into display advertising as it closed its $3.1 billion acquisition of online ad services company DoubleClick.

In the estimation of Google and Microsoft, publishers and advertisers will outsource much of the technology needed to manage their online advertising efforts, relying on the wide-ranging platforms the two companies are building. Howe said some publishers would offload nearly all of their operations to Microsoft, while others would only need pieces.

Financial terms of the deal were not disclosed.

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If you want to find out how this was build and what kind of technical issues it faces, don’t forget to read my “How to build a Second Life universe and make it successful and profitable” recent post.

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