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 InternetNews.com. "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."

more...
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 Ask.com under which customers of Microsoft's paid search programs will see their listings appear on sites operated by Ask.com 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.

Electronic Gadgets Often Full of Computer Viruses

Computer consultant Jerry Askew shows how a digital photo frame he bought at Target was infected with at least four different viruse

From iPods to navigation systems, some of today's hottest gadgets are landing on store shelves with some unwanted extras from the factory — pre-installed viruses that steal passwords, open doors for hackers and make computers spew spam.

Computer users have been warned for years about virus threats from downloading Internet porn and opening suspicious e-mail attachments.

Now they run the risk of picking up a digital infection just by plugging a new gizmo into their PCs.

Recent cases reviewed by The Associated Press include some of the most widely used tech devices: Apple iPods, digital picture frames sold by Target and Best Buy stores and TomTom navigation gear.

In most cases, Chinese factories — where many companies have turned to keep prices low — are the source.

So far, the virus problem appears to come from lax quality control — perhaps a careless worker plugging an infected music player into a factory computer used for testing — rather than organized sabotage by hackers or the Chinese factories.

It's the digital equivalent of the recent series of tainted products traced to China, including toxic toothpaste, poisonous pet food and toy trains coated in lead paint.

But sloppiness is the simplest explanation, not the only one.

If a virus is introduced at an earlier stage of production, by a corrupt employee or a hacker when software is uploaded to the gadget, then the problems could be far more serious and widespread.

Knowing how many devices have been sold, or tracking the viruses with any precision, is impossible because of the secrecy kept by electronics makers and the companies they hire to build their products.

But given the nature of mass manufacturing, the numbers could be huge.

"It's like the old cockroach thing — you flip the lights on in the kitchen and they run away," said Marcus Sachs, a former White House cybersecurity official who now runs the security research group SANS Internet Storm Center. "You think you've got just one cockroach? There's probably thousands more of those little boogers that you can't see."

Jerry Askew, a Los Angeles computer consultant, bought a new Uniek digital picture frame to surprise his 81-year-old mother for her birthday. But when he added family photos, it tried to unload a few surprises of its own.

When he plugged the frame into his Windows PC, his antivirus program alerted him to a threat. The $50 frame, built in China and bought at Target, was infested with four viruses, including one that steals passwords.

"You expect quality control coming out of the manufacturers," said Askew, 42. "You don't expect that sort of thing to be on there."

Security experts say the malicious software is apparently being loaded at the final stage of production, when gadgets are pulled from the assembly line and plugged in to a computer to make sure everything works.

If the testing computer is infected — say, by a worker who used it to charge his own infected iPod — the digital germ can spread to anything else that gets plugged in.

The recent infections may be accidental, but security experts say they point out an avenue of attack that could be exploited by hackers.

"We'll probably see a steady increase over time," said Zulfikar Ramzan, a computer security researcher at Symantec Corp. "The hackers are still in a bit of a testing period — they're trying to figure out if it's really worth it."

Thousands of people whose antivirus software isn't up to date may have been infected by new products without even knowing it, experts warn. And even protective software may not be enough.

In one case, digital frames sold at Sam's Club contained a previously unknown bug that not only steals online gaming passwords but disables antivirus software, according to security researchers at Computer Associates.

"It's like if you pick up a gun you've never seen before — before you pull the trigger you'd probably check the chamber," said Joe Telafici, vice president of operations of McAfee Avert Labs, the security software maker's threat-research arm.

"It's an extreme analogy, but it's the right idea. It's best to spend the extra 30 seconds to be sure than be wrong," he added.

Consumers can protect themselves from most factory-loaded infections by running an antivirus program and keeping it up to date.

The software checks for known viruses and suspicious behaviors that indicate an attack by malicious code — whether from a download or a gadget attached to the PC via USB cable.

One information-technology worker wrote to the SANS security group that his new digital picture frame delivered "the nastiest virus that I've ever encountered in my 20-plus-year IT career."

Another complained his new external hard drive had malfunctioned because it came loaded with a password-stealing virus.

Monitoring suppliers in China and elsewhere is expensive, and cuts into the savings of outsourcing. But it's what U.S. companies must do to prevent poisoning on the assembly line, said Yossi Sheffi, a professor at the Massachusetts Institute of Technology specializing in supply chain management.

"It's exactly the same thing, whether it happened in cyberspace or software or lead paint or toothpaste or dog food — they're all quality control issues," Sheffi said.

While manufacturing breakdowns don't happen often, they have become frequent enough — especially amid intense competition among Chinese suppliers — to warrant more scrutiny by companies that rely on them, Sheffi said.

"Most of the time it works," he said. "The Chinese suppliers have every reason to be good suppliers because they're in it for the long run. But it's a higher risk, and we've now seen the results of that higher risk."

The AP contacted some of the world's largest electronics manufacturers for details on how they guard against infections — among them Hon Hai Precision Industry Co., which is based in Taiwan and has an iPod factory in China; Singapore-based Flextronics International Ltd.; and Taiwan-based Quanta Computer Inc. and Asustek Computer Inc.

All declined comment or did not respond.

The companies whose products were infected in cases reviewed by AP refused to reveal details about the incidents. Of those that confirmed factory infections, all said they had corrected the problems and taken steps to prevent recurrences.

Apple disclosed the most information, saying the virus that infected a small number of video iPods in 2006 came from a PC used to test compatibility with the gadget's software.

Best Buy, the biggest consumer electronics outlet in the U.S., said it pulled its affected China-made frames from the shelves and took "corrective action" against its vendor. But the company declined repeated requests to provide details.

Sam's Club and Target say they are investigating complaints but have not been able to verify their frames were contaminated.

Legal experts say manufacturing infections could become a big headache for retailers that sell infected devices and the companies that make them, if customers can demonstrate they were harmed by the viruses.

"The photo situation is really a cautionary tale — they were just lucky that the virus that got installed happened to be one that didn't do a lot of damage," said Cindy Cohn, legal director for the Electronic Frontier Foundation. "But there's nothing about that situation that means next time the virus won't be a more serious one."