Facebook is buying a set of onlineadvertising tools called Atlas from Microsoft in its latest attempt to build amore effective marketing system around its social network.
In making the deal announced Thursday, Facebook is bettingthe acquired technology will be more fruitful under new ownership than it wasduring the past 5 1/2 years under Microsoft's control. The financial details ofthe deal were not disclosed.
Atlas is part of an online advertising service calledaQuantive, which Microsoft Corp. bought for $6.3 billion in 2007. Aquantivedidn't bring in as much online ad revenue as Microsoft envisioned, promptingthe software maker to absorb a $6.2 billion charge last year that resulted inits first quarterly loss in its 26-year history as a public company.
Given the magnitude of that writedown, Facebook probablydidn't have to pay much to take Atlas off Microsoft's hands. The undisclosedpurchase price is a sign that the amount isn't substantial enough to leave abig dent in the company's finances.
Atlas provides monitoring tools that help advertisers assesshow their online marketing tools are faring. It helps marketers makeadjustments needed to connect people more likely to buy their products andservices.
Facebook Inc. already analyzes the interests that peopleshare on its social network to target ads at certain audiences.
Those insights helped Facebook sell $4.3 billion inadvertising last year, a 36 percent increase from 2011.
But that wasn't enough to satisfy investors who wantFacebook to grow at a faster rate. Wall Street's disappointment with Facebook'sperformance, particularly in the growing mobile advertising market, has leftthe company's stock price below the $38 price paid in its initial publicoffering last May. The shares dipped four cents to $27.21 in extended tradingafter Facebook announced its acquisition.
Atlas could help Facebook do a better job of using itsknowledge about more than 1 billion users to place ads on sites that tethertheir services to Facebook's social network, according to Forrester Researchanalyst Nate Elliott.
"The question now is how quickly and successfullyFacebook can integrate its data with Atlas' tools, and whether they can avoid aprivacy backlash as they do so," Elliott wrote Thursday in a blog post.
Facebook has faced recurring complaints that it disregardspersonal privacy in its zeal to vacuum up more sensitive data from users andsell more advertising.
The company, which is based in Menlo Park, California, viewsAtlas as an "important step" that "will help advertisers to amore complete view of the effectiveness of their campaigns," according toa blog post written by Brian Boland, Facebook's director of product marketing.
Atlas also could help Facebook compete against the array ofanalytical tools and services that online advertising leader Google Inc. offersto marketers. Google, though, brings in most of its advertising revenue throughits dominant Internet search engine, a weapon that Facebook is trying tocounter with a recently introduced feature, called Graph Search, which makes iteasier for its users to find information within its social network.
Google is expected to attract about 43 percent of theprojected $42.5 billion in online ad spending in the U.S. this year, followedby Yahoo Inc. and Microsoft at about 7 percent and Facebook at 6 percent,according the research firm eMarketer.
Google has widened its share from about 31 percent sinceMicrosoft bought Atlas as part of the ill-fated aQuantive acquisition.
Microsoft, which is based in Redmond, Washingtonfared much better in the Facebook IPO than it did with the aQuantive acquisition.After investing $240 million in Facebook in 2007, Microsoft reaped a $249million windfall last year by selling just 20 percent of its holdings inFacebook's IPO.