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Saturday, March 15, 2008

Microsoft to buy online ad technology firm Rapt

Microsoft Chairman Bill Gates testifies on Capitol Hill in Washington, Wednesday, March 12, 2008, before the House Science and Technology Committee hearing on competitiveness and innovation.

Microsoft Corp. plans to buy Rapt Inc., plugging a hole in its suite of tools for Web publishers and advertisers, the software giant said Friday.
Microsoft did not say what it will pay for the privately held San Francisco company.
Rapt's software and consulting services help Web site publishers tweak how they package and price display-ad space.

Microsoft's Latest Ad Buy
Microsoft announced that it is purchasing Rapt, an advertising technology company specializing in sophisticated analytical tools. Terms of the deal were not disclosed.
Today's is the latest in a frenzied string of acquisitions by Microsoft and other Internet heavyweights looking to expand the reach and technology underlying their online advertising businesses. Most recently, Microsoft purchased YaData, an Israeli company specializing in behavioral targeting technology.

The Rapt buy is about helping well-funded Web publishers manage their advertising efforts with premium analytics and campaign planning features. Microsoft will fold Rapt's technology into its Atlas Publisher Suite (APS). Atlas is one of the brands Microsoft acquired through its purchase of aQuantive.

Consistently, Web publishers say that they want to focus on driving ad sales by improving their content and their users' experience, but that is only a small part of the equation, said Scott Howe, general manager of Microsoft's APS.

"Selling online advertising if you're a publisher is hard, and it's getting more complex as time goes on," Howe said.

Where many publishers need help is in the technical aspects of managing ad sales, such as pricing, forecasting and selling remnant inventory.

Rapt's Yield Advisor product, which Microsoft will begin promoting to publishers as soon as the deal closes, offers predictive tools for sites to plan ad sales around future-looking inventory estimates.

Pricing analytics are designed to help sales teams determine the optimal rates to charge advertisers, aimed at minimizing the amount of unsold inventory.

Microsoft expects the purchase to round out its suite of offerings for publishers.

"As a result of this acquisition, we feel like we have no gaps," Howe told "We can partner with the publisher very narrowly or very broadly."

The announcement comes just a day after Google (NASDAQ: GOOG) announced its first ad product following the close of the DoubleClick acquisition -- also a service for publishers to manage their ad inventories and sell remnant space on their sites.

In their latest ad moves, Microsoft and Google are both courting publishers. The principal difference is that Google's Ad Manager, a free, hosted service, is intended for small companies with marginal sales staffs, while Microsoft's acquisition of Rapt is geared for high-end publishers with large content networks and sales staffs. Among Rapt's clients are The New York Times Company, Fox Interactive Media, Yahoo and Microsoft itself.

"Our design here isn't for the long tail," Howe said. "It's for sophisticated publishers with sophisticated needs."

Rapt's products are designed to help online publishers improve the pricing and provisioning of online ads.
Microsoft is placing a broad range of products and services within APS, including its AdCenter search listings purchasing tool and agency services offered by Avenue A/Razorfish -- which was part of aQuantive. Microsoft acquired aQuantive last year for $6 billion.

The unit will also include services for advertisers looking to place spots within video games and other digital products that represent new frontiers for Madison Avenue.

Microsoft is making other moves to bolster its digital advertising business.

Last May, the company acquired Screen Tonic, a European manufacturer of software designed to connect online advertisers with users of mobile phones and other digital devices. In July, the software maker announced a partnership with under which customers of Microsoft's paid search programs will see their listings appear on sites operated by and its partners.

The moves are widely seen as an attempt to improve Microsoft's ability to compete against Google and Yahoo as a provider of search advertising. In its most recent fiscal year, Microsoft reported $2.47 billion in revenue in online services, including advertising -- an increase of 7.4% over the previous year.

Microsoft is also looking to buy Yahoo for about $41 billion. To date, Yahoo has rejected the bid. The Wall Street Journal on Thursday reported that the two companies held informal talks earlier this week to discuss the offer.

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