Everyone Loves Microsoft-Viacom Deal, Especially Google

Much rejoicing over yesterday’s announcement that Viacom will ditch DoubleClick and move all its online related ad serving, ad-selling, etc. to Microsoft’s aQuantive.

  • Microsoft loved the deal because it helped promote the fiction that Microsoft is suddenly competitive with Google
  • Viacom loved the deal because it gave Viacom another opportunity to rave publicly about its web strategy
  • Google loved the deal because it helped it promote the fiction that online advertising is truly a competitive market–thus bolstering its case for the DoubleClick acquisition.

Of course, the deal could have been presented another way, which is that Microsoft is so desperate to gain some momentum in the web ads that it bought Viacom’s serving business. CNBC’s David Faber pried this detail out of Microsoft’s Kevin Johnson, who appeared to agree that, although Microsoft is providing the services, Microsoft is making payments to Viacom. (Based on Kevin’s response, this payment appears to be in the form of ads, content licensing, and other barter rather than cash, but it is presumably included in the “$500 million!” total).

And, regardless of the details, the “$500 million” number the two companies threw around to make the deal seem huge is vapor: It’s a five-year deal, or $100 million per year. Viacom says it does about $500 million in online revenue per year. So even if all the money is going from Viacom to Microsoft, which it sounds like it is not, this is only 1/5th of Viacom’s overall web business at the current run-rate.

No wonder Google loves the deal.

See Also:
Microsoft Paying Viacom For the Privilege of Serving Its Ads
Viacom and Microsoft in $500 Million Ad, Promo Deal

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