Microsoft has announced yet another deal on Friday as it has decided to acquire the online advertising company aQuantive for about $6 billion, marking the latest in a spell of acquisitions for online advertising companies by leading Internet and media companies. The all-cash deal is Microsoft’s largest acquisition ever and comes with a surprisingly large premium; drawing attention to just how serious Microsoft considers the acquisition is to its troubled efforts to become a major power in the fast-growing Internet advertising business. The offered price, $66.50 per share, is representing 85 percent more than aQuantive’s closing stock prince of $35.87 on Thursday.
The purchase would provide Microsoft the potential to place advertisements on web sites other than its own and additionally evaluate whether the advertisements are effective. Further it would also improve Microsoft’s capability to aim at advertising based on users’ Web-surfing habits. Microsoft, falling in line with Google and Yahoo, is making a bet that it can convert billions of clicks that point toward online user behavior into a revenue stream, which was almost unthinkable a generation before. Interactive advertising is apparently a clear exit from traditional media such as newspapers and television, which can only roughly measure how many people have seen the advertisement.
The struggle for advantage in the digital advertising boom reached new heights as Google started it all with its $3.1 billion bid for DoubleClick. And while competitors quickly lined up against the company, crying ‘anti-trust’ and demanding for a Justice Department investigation, behind the scenes, they were looking for deals of their own. 
Microsoft sought to mitigate Google’s growing influence in the money-spinning Internet advertising business by orchestrating its largest ever take over yet, a $6-billion purchase of an online marketing firm. Microsoft’s offer for Seattle-based aQuantive represents nearly double what Google paid just last month for privately held DoubleClick. Both internet giants are moving to strengthen their foothold in the emerging sector of brokering and managing Internet advertisements.
The latest acquisition signifies a massive shift in the Redmond-based company’s traditional strategy of developing its own businesses from the ground up. Microsoft has built its own search engine and Internet ad brokering system called adCenter, however the hard work have been deficient to keep pace with Google and, to a slighter extent, Yahoo Inc. Experts believe that Microsoft lost out on acquiring at least two online advertising firms, DoubleClick and 24/7 Real Media Inc., leaving it not enough choice but to pay an unreasonable premium for aQuantive.
As a matter of fact, the online advertising market is wide spread that Google’s grip on a significantly sizeable portion of the market for serving ads to third-party Web publishers does not account for much of the amount spent on advertising. There are still many other options where plenty of money changing hands but remain out of Google’s reach. This argument was also supported by Google CEO Eric Schmidt when he acknowledged that the total market reach of Google and DoubleClick amounted to around one percent of the $1 trillion ad business worldwide.
In the meanwhile, investors and analysts have started speculating that whether competitor ValueClick Inc. has now become a prime target for an acquisition of its own. ValueClick, which some analysts consider as the fourth largest firm in the online advertising space, is the last man standing now that aQuantive and other sector majors have all been acquired in a matter of weeks.
However, a faction of experts believe that ValueClick is still on its own since buyers are generally interested in gaining ad serving technology, which only makes up a small portion of the company’s sales. The technology helps companies place and manage their online advertising.
Analysts at ZenithOptimedia, a media buying agency, have predicted that Internet ad spending will total $31 billion globally this year, a 28 percent increase from last year. In terms of market share, the Internet has already passed outdoor advertising and will surpass radio next year. The online advertising is growing leaps and bounds, roughly at the rate of 20 percent year-over-year for the predictable future and there is about $600 billion in overall advertising on a worldwide basis.
