Razorfish Sold

Razorfish, a digital marketing agency that Microsoft acquired in its US$6 billion acquisition of aQuantive, has been sold to Publicis Groupe, one of the world’s largest advertising and communications agencies, for a combination of cash and stock valued at about US$530 million. (Precise terms will depend on Publicis Groupe’s share price at the time the deal closes.) The deal ends a conflict of interest in which one part of the Microsoft Advertising group—Razorfish—was guiding customers to major Microsoft competitors.

Part of the Package

Razorfish has always been an awkward fit for Microsoft’s advertising strategy: to remain competitive, the agency had to let clients buy advertising on sites run by Microsoft competitors, such as Google and Yahoo, and could not appear to be favoring Microsoft’s online properties. Microsoft bought the agency because it was an integral part of aQuantive, which had assets such as the Atlas online campaign management tools and DrivePM advertising networks that Microsoft wanted to use to improve its own advertising platform. AQuantive was founded in 1997 as a digital marketing agency called Avenue A and acquired Razorfish in 2004; by the time of Microsoft’s acquisition in summer 2007, these agencies accounted for about 60% of aQuantive’s annual revenue of US$442 million, and nearly 40% of its US$54 million profit. (Razorfish encompasses the entire agency business; the Avenue A brand was eliminated in 2008.)