Microsoft, Viacom Throw Down $500m Google Ad Gauntlet

21 December 2007

REDMOND, Washington: Software and media titans Microsoft and Viacom have inked a $500 million (€348m; £251m) deal in an effort to find a chink in Google's seemingly invincible online advertising armor.

Under the new five-year agreement, Microsoft's Atlas division will become the ad server for Viacom's three hundred-plus US websites.

In addition, Microsoft will be the exclusive seller of ad inventory that Viacom has been unable to shift, and has agreed to buy ads on the latter's broadcast and online networks.

Viacom, whose entertainment stable includes MTV, Comedy Central and Paramount Pictures, will provide Microsoft with non-exclusive audio and video content from its cable and motion-picture businesses.

Although Google is unlikely to be shaking in its shoes, the move may give it pause for thought.

Microsoft is objecting to the online search behemoth's proposed $3.1 billion acquisition of web ad firm DoubleClick.

The move has been subject to competition scrutiny on both sides of the Atlantic and the US Federal Trade Commission is expected to deliver its findings imminently.

Until now Viacom has used DoubleClick to process the bulk of its online ads, but the new alliance with Microsoft will result in a shift of its business into Atlas "within months".

Meantime, Viacom is pursuing Google with a $1 billion lawsuit over alleged breach of copyright on the latter's YouTube video sharing website.

Comments Viacom president/ceo Philippe Dauman: "This is a novel and comprehensive partnership that demonstrates the scale of our digital operation and the value of our branded content across all distribution platforms.

"Microsoft's superior assets and expertise in the ad serving and sales business will drive enhanced value to our digital operations."

Data sourced from Wall Street Journal Online; additional content by WARC staff