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Microsoft Corp. the world's largest software maker, is a contender to buy Internet advertising firm 24/7 Real Media Inc. for as much as $1 billion, the New York Post reported on Tuesday.
Shares in 24/7 Real Media surged more than 28 percent in premarket trading to $12.75 from a close of $9.95 on Monday following the Post report, which cited unnamed sources.
Microsoft eyes Web ad firm 24/7 Real Media: report
Google, Yahoo, and now Microsoft are all snapping up the big players in the advertising game. This is good news and bad news, depending on how you look at it. I think a lot of people here are going to "doom and gloom" this, so I'll stick to the good news.
Good news for advertisers:
Because they'll have clearer choices on where to put their ad spend, and they'll be able reach an ever wider audience regardless of which major outfit they put their spend into. For big advertisers, it's all about reaching the widest possible audience in the most direct means possible. This is what's keeping network TV alive right now. Even with increasing fragmentation of the TV viewing market (an ever expanding cable line up), and decreasing viewership (people are spending less time, on average, watching TV), purchasing ad space on net2work TV is still a good buy for major consumer goods manufacturers (think automotive, major appliances, national store chains). Even though the overall share is down, nothing can reach a mass audience as effectively as a Top 10 network TV program.
With consolidation in the online ad market, the landscape changes. Not only can big advertisers reach big audiences, they can divvy up their spend online much as they would in the traditional TV landscape. Ford, GM and Chrysler can blanket the medium by putting out a campaign with Google, Yahoo, and MSN at the same time, much as they currently do by spreading a campaign across CBS, ABC, and NBC.
Along with the far better metrics that go with online advertisers (it's far easier to track how many people see the ads, click on the ads, and who these viewers and clickers are, in a demographic sense), consolidation provides a lot of incentive for the big players to move some heavy money towards online advertising.
Good News for Publishers:
As I stated above, I believ consolidation will bring more dollars into the online advertising market, and that's always a benefit for publishers.
Also, it will be easier for publishers to manage their advertising effectively. Instead of having "one major" and multiple niche advertisers to manage, content publishers will be able to easily divvy up the presence of ads between three majors.
With three "big boys" in play, it will actually be easier to play them off against each other. These three competitors will fight hard for as big a part of the pie as they can manage. It will be simple for publishers to have accounts with all three players. Given that everyone is using standardised size formats, and publishers are using dynamically generated pages (php, asp, etc.), it will be easy to shift the predominance of ads from the different players depending on who's paying out the most at any given time. Change a few lines of code in a style sheet, and whamo, ad network A) gets 70% play. Their payouts and CTR falls off, and another quick change moves player B) to 70% play.
There are downsides to consolidation, but so long as we see at least three major players, I believe there will be enough competition for this to, overall, be a good thing for publishers.