Is Microsoft’s Great Ad Experiment Over?

Nearly two years ago, Microsoft CEO Steve Ballmer told a group of European advertising executives that he saw online ads generating one-quarter of Microsoft’s revenue within a few years. Yet in the quarter ended June 30, Microsoft’s Online Services Business turned in sales of just $731 million, some 5 percent of its $13.1 billion total. It was also the company’s worst-performing division, with an operating loss of $732 million. In other words, Microsoft spent $2 for every $1 it made online. So with the recent Yahoo search deal and today’s sale of its Razorfish digital ad shop, is Microsoft trying to get out of the ad business?

Microsoft picked up digital marketing shop Razorfish when it bought aQuantive for $6 billion in 2007 (four months before Ballmer made his one-quarter-of-revenue remark). Today, after months of rumors, Microsoft is selling Razorfish to the Publicis Group for $530 million in cash and stock plus a 5-year strategic alliance between the two companies. And with the search deal it inked with Yahoo last month, Microsoft gets to jettison its advertising responsibilities to Yahoo while it focuses on the technology—its search engine, Bing, and sales platform, AdCenter—side of things.

Google Brand Worth $100Bn; Nintendo Wii Top Console

Millward Brown Optimor published its 100 most valuable global brands, naming Google the most well-known and valuable in the world. The brand and marketing analytics firm on Thursday began making some noise about its BrandZ Top 100 report.

It’s the third consecutive year in a row that Google made No. 1. But this year, the Mountain View, Calif. company’s brand equity is worth $100 billion — a 16% increase from a year ago. Microsoft came in No. 2 at $76.2 billion, up 8% compared with the prior year.

Coca-Cola, IBM, McDonald’s, Apple, China Mobile, General Electric, Vodafone and Marlboro follow, rounding out the top 10. That’s four high-tech companies in the top 10, along with two telecom carriers. Millward Brown Optimor bases the valuation on the brand’s “ability to generate demand. The dollar value of each brand in the ranking is the sum of all future earnings that brand is forecast to generate, discounted to a present day value.”

Newspapers Still Send Consumers To The Store

According to early data from MORI Research, announced by the Newspaper Association of America, 59% of adults identify newspapers as the medium they use for planning, shopping and purchase decisions, making newspapers the leading advertising medium cited by consumers for these activities.

Publicis Groupe To Buy Microsoft’s Razorfish

French advertising group Publicis Groupe SA has agreed to acquire Internet ad agency Razorfish from Microsoft for $530 million in cash and stock.

Razorfish will continue to operate under its own brand name and continue to serve as Microsoft’s “preferred provider” for Internet advertising, the companies announced Sunday in a joint statement. The deal includes a strategic alliance agreement in which Publicis Groupe will purchase display and search advertising from Microsoft over a five-year period.

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Publicis Groupe is one of the world’s largest media companies, employing about 44,000 people at advertising networks Leo Burnett and Saatchi & Saatchi, as well as media buyers Starcom MediaVest Group and ZenithOptimedia.