Facebook buying Atlas ad business from Microsoft

Published: 01st March 2013 10:15 AM  |   Last Updated: 01st March 2013 10:15 AM   |  A+A-

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Facebook is buying a set of online advertising tools called Atlas from Microsoft in its latest attempt to build a more effective marketing system around its social network.

In making the deal announced Thursday, Facebook is betting the acquired technology will be more fruitful under new ownership than it was during the past 5 1/2 years under Microsoft's control. The financial details of the deal were not disclosed.

Atlas is part of an online advertising service called aQuantive, which Microsoft Corp. bought for $6.3 billion in 2007. Aquantive didn't bring in as much online ad revenue as Microsoft envisioned, prompting the software maker to absorb a $6.2 billion charge last year that resulted in its first quarterly loss in its 26-year history as a public company.

Given the magnitude of that writedown, Facebook probably didn't have to pay much to take Atlas off Microsoft's hands. The undisclosed purchase price is a sign that the amount isn't substantial enough to leave a big dent in the company's finances.

Atlas provides monitoring tools that help advertisers assess how their online marketing tools are faring. It helps marketers make adjustments needed to connect people more likely to buy their products and services.

Facebook Inc. already analyzes the interests that people share on its social network to target ads at certain audiences.

Those insights helped Facebook sell $4.3 billion in advertising last year, a 36 percent increase from 2011.

But that wasn't enough to satisfy investors who want Facebook to grow at a faster rate. Wall Street's disappointment with Facebook's performance, particularly in the growing mobile advertising market, has left the company's stock price below the $38 price paid in its initial public offering last May. The shares dipped four cents to $27.21 in extended trading after Facebook announced its acquisition.

Atlas could help Facebook do a better job of using its knowledge about more than 1 billion users to place ads on sites that tether their services to Facebook's social network, according to Forrester Research analyst Nate Elliott.

"The question now is how quickly and successfully Facebook can integrate its data with Atlas' tools, and whether they can avoid a privacy backlash as they do so," Elliott wrote Thursday in a blog post.

Facebook has faced recurring complaints that it disregards personal privacy in its zeal to vacuum up more sensitive data from users and sell more advertising.

The company, which is based in Menlo Park, California, views Atlas as an "important step" that "will help advertisers to a more complete view of the effectiveness of their campaigns," according to a blog post written by Brian Boland, Facebook's director of product marketing.

Atlas also could help Facebook compete against the array of analytical tools and services that online advertising leader Google Inc. offers to marketers. Google, though, brings in most of its advertising revenue through its dominant Internet search engine, a weapon that Facebook is trying to counter with a recently introduced feature, called Graph Search, which makes it easier for its users to find information within its social network.

Google is expected to attract about 43 percent of the projected $42.5 billion in online ad spending in the U.S. this year, followed by 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 since Microsoft bought Atlas as part of the ill-fated aQuantive acquisition.

Microsoft, which is based in Redmond, Washington fared much better in the Facebook IPO than it did with the aQuantive acquisition. After investing $240 million in Facebook in 2007, Microsoft reaped a $249 million windfall last year by selling just 20 percent of its holdings in Facebook's IPO.

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