Microsoft says has all it needs for ad business
With $6 million buy of Aquantive, Redmond's chief advertising strategist says company doesn't need to acquire more assets to succeed.
Speaking at the Goldman Sachs Internet Conference in Las Vegas, Microsoft Chief Advertising Strategist Yusuf Mehdi said the world's largest software maker is already bigger than Yahoo in terms of users of its Web services like e-mail and instant messaging.
Last week, Microsoft said it would acquire Aquantive for $6 billion to gain a foothold in the online advertising business dominated by its rivals Google and Yahoo.
Still, some Wall Street analysts said Microsoft needed to buy an established Internet player such as Yahoo to gain scale to take on Google.
When asked by Goldman Sachs analyst Anthony Noto whether there would be assets from Yahoo that could help Microsoft, Mehdi said, "From where we are today, I think we have all the pieces."
Several newspapers reported this month that Microsoft was considering a deal worth an estimated $40 billion to $50 billion to acquire Yahoo. A source close to the situation subsequently said at the time that any talks had cooled.
Microsoft's Mehdi said Aquantive gives the company a strong position in serving up display ads on Web sites using technology that provides behavioral targeting. This is an area, according to Mehdi, that is experiencing more growth than ads tied to Web search results.
Google, which has built a multibillion-dollar advertising business largely on the back of its dominant position in Web search, continues to gain market share in search. Google's advertising revenue is growing three times faster than Microsoft's and Yahoo's.
"It's no longer just about search," Mehdi said. "Search and display have essentially converged."
Microsoft's shares rose 5 cents to $30.74 in afternoon Nasdaq trading, while Yahoo shares rose 7 cents to $28.99.