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Microsoft Ditch Online Agency Razorfish 2 Years After Buying It
Microsoft is reportedly looking to sell its online advertising agency Razorfish just two years after acquiring it as part of a $6bn deal for parent company aQuantive Inc. A report in the Financial Times suggested that Microsoft has brought in the investment bank Morgan Stanley to seek out a potential buyer for the agency, which according to predictions should sell for somewhere between $600 million and $700 million in the current economic climate. There has been some speculation about whether or not Microsoft would part with Razorfish as part of its new strategy to trim back expenses and restrict its actions to core business needs through the recession.
When Microsoft bought aQuantive back in 2007 it was looking to reinforce its online advertising presence and enable the company to compete more effectively with Google. Avenue A/Razorfish, as the company was then called, was far less important to Microsoft than the other benefits aQuantive had to offer as much as it would allow the company to significantly broaden its online ad network and give it a much better chance of competing with the biggest online contender, Google. The ownership of an advertising agency, however, may have meant a conflict of interest for Microsoft as Razorfish would be competing directly with the company’s own advertising efforts for marketing Microsoft products online.
Razorfish has a number of A-list clients including Nike, Mercedes-Benz USA, Levi-Strauss & Co and Audi, for whom it has created high profile online advertising campaigns with great success. The estimated price of the agency may seem like a mere drop in the ocean of Microsoft’s finances, but ridding themselves of the conflict of interest could give Microsoft the opportunity to concentrate on marketing its own products in its own way. The FT report names French marketing company Publicis Groupe as the most likely contender to buy Razorfish, following further indications that the two companies are also planning to work together on a TV advertising campaign.
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