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Microsoft offloads digital ad agency for $530m

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In a deal worth about $530m in cash and stock, Microsoft has offloaded its Razorfish digital ad agency to Publicis Groupe, the French advertising giant that purchased a search-engine marketing biz from Google last year.

Microsoft acquired Razorfish in 2007 as part of its unprecedented $6bn acquisition of the Seattle-based internet advertising firm aQuantive. According to reports, Redmond has been shopping the agency to potential buyers for the past several months.

Razorfish will continue to operate under its own name, and after the deal closes, the agency will be a "preferred provider" to Microsoft, with Redmond agreeing to spend a certain amount with the agency over the next five years. Under an agreement that builds on a previously announced pact between Microsoft and Publicis, Redmond will provide discounted search and display ad rates to Publicis customers - provided such aggregate purchase levels are met.

"We are grateful for the contributions Razorfish has made to our online advertising business since joining the company as a part of the aQuantive acquisition in 2007, and are pleased that they have found a new long-term home with Publicis Groupe," read a canned statement from Microsoft chief Steve Ballmer. "We look forward to continuing to work with Razorfish as one of our agencies, and we're confident that as a part of Publicis Groupe, Razorfish will build on its success to date in the digital advertising industry."

Publicis calls itself the world's fourth largest communications group, with approximately 44,000 employees worldwide. Last August, the firm purchased the search-engine marketing arm of Performics, the business unit Google nabbed as part of its much-discussed acquisition of internet ad giant DoubleClick.

In consuming DoubleClick for $3.1bn, Google beat Micrsoft to the advertising acquisition punch, and Redmond soon answered with its $6bn purchase of aQuantive, its largest-ever acquisition.

aQuantive allowed Microsoft to expand its search and display ad platforms while beefing up its relationships with advertisers, third-party publishers, and outside ad agencies. But in the long run, the company had no interest in running an agency of its own.

Formerly Avenue A/Razorfish, Razorfish calls itself "one of the largest interactive marketing and technology companies in the world," providing all sorts of consulting services for advertisers. The firm created the logo for Microsoft's Bing as well as the digital ads that trumpeted the new search engine.

Razorfish has offices across the US and in Australia, China, France, Germany, Japan, Spain, and the UK. Its clients include Carnival Cruise Lines, MillerCoors, Levi's, McDonald's and Starwood Hotels. ®

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