Microsoft’s Next Move: A Roll-Up?

Microsoft has finally got its hands on an Ad Network. With its aQuantive acquisition, however, Microsoft has got something else: a portfolio of great interactive ad agencies, including Avenue A/ Razorfish.

An interesting, offbeat, but smart move for Microsoft could be to proactively roll-up a large chunk of the online advertising space, which will force their competitors, Google and Yahoo, to sit up.

Let’s look at the players.

Here’s a list of the Top 50 Interactive Agencies of 2006. Omnicom and WPP group own a number of them. Omnicom owns Rapp Collins, Organic, Tribal DDB, Agency.com, and Atmosphere BBDO. WPP owns Wunderman, Oglivy Interactive, G2, and VML. Publicis owns Digitas, Modem Media, Arc, and Moxie. A few others are owned by Interpublic, Aegis Group, Havas, etc. Over 50% of the top 50, however, are still independent.

Sapient (Nasdaq : SAPE) is publicy traded, and AKQA, private, recently changed hands from one private equity firm, Francisco Partners, to another, General Atlantic. Between the two, they have a number of great accounts, and if you add to that the 25 other independent players, Microsoft could easily string together a very interesting portfolio of agencies that would give them GREAT leverage with top accounts. [I wrote an earlier piece, suggesting Yahoo acquires AKQA.]

If Microsoft follows this strategy, then Google and Yahoo would have an interesting challenge: instead of a top competitor, Microsoft then becomes a top client. Could be an ironical twist of fate!