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Jul. 26, 2007 at 4:32pm Eastern by Greg Sterling
Microsoft Buys Ad Exchange AdECN
Microsoft has announced that it will purchase AdECN, an online ad exchange that competes with Yahoo's RightMedia and, presumably, the forthcoming DoubleClick exchange. Assuming that the deal goes through and Google's acquisition of DoubleClick isn't blocked by regulators, all the major search engines will have extended graphical ad distribution through so-called exchanges. This is obviously about building out more distribution and reach for Microsoft advertisers.
I spoke to Microsoft and Bill Urschel, CEO of AdECN since writing the post above.
Microsoft's Joe Doran, General Manager, Microsoft Digital Advertising Solutions, said that AdECN will remain independent and not become part of a proprietary Microsoft ad network. In that regard, Microsoft is positioning itself here as a kind of anti-Google, which it argues is attempting to build a monopolistic ad network. Instead, Microsoft is stressing openness, transparency and neutrality as values that it will adhere to going forward in owning the exchange. (The inventory bought and sold is display advertising.)
For some, the puzzling thing will be the fact that Microsoft, though it will get the revenues of the company, is reportedly not going to be getting any special treatment or advantage out of the acquisition. Bill Urschel will remain at the helm and is not being moved to Redmond. He said that Microsoft is committed to the principles of neutrality and transparency that he argues are the hallmarks of a true ad exchange as opposed to what might be called a meta-network (which is what Urschel argues RightMedia truly is). One of the other hallmarks is scale.
To some degree this debate about large networks vs. exchanges is about semantics and to some degree about principle. ContextWeb now claims it has the only "independent exchange" online, ADSDAQ. But if everyone has an exchange, then no one has an exchange.
So why did Microsoft "buy the loaf" when it could have gotten more modestly priced slices like all the others members of the AdECN exchange? In other words, Microsoft will merely be another member of the exchange with no special authority or power. The contention here is that by buying AdECN Microsoft is taking it away from another potential buyer that might have turned it into much more of a parochial, proprietary network. Doran said that they hope to grow AdECN substantially as a true exchange.
Whether Microsoft is able to realize AdECN's promise in that regard (and in terms of scale) of course will be determined later. But the company's "hands off' attitude, if it holds, is probably a wise approach.
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By Greg Sterling
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