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Why Are Microsoft Selling Its Online Advertising Agency Razorfish?
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 has been valued between $600 million and $700 million. 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 concentrate purely on its core business during the recession.
When Microsoft bought aQuantive back in 2007 it was looking to reinforce its online advertising presence and be in a better position to compete with Google in online advertising. The benefits of owning Avenue A/Razorfish, as the agency was then called, were secondary to other aspects of what aQuantive could offer Microsoft in terms of expanding its online advertising presence and placing the company in a far better position to compete with search engine giant Google. The ownership of an advertising agency, however, may have meant a conflict of interest for Microsoft as Razorfish is a direct competitor to Microsoft's own advertising campaigns for marketing its products online.
Razorfish's extensive list of high profile clients includes Nike, Mercedes-Benz USA, Levi-Strauss & Co and Audi. The amount of money involved might not seem much to Microsoft, but the decision to sell 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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