Microsoft purchases of Drawbridge take it deeper into online ads

Satya Nadella and Jeff Weiner at Microsoft buy LinkedIn June 13, 2016.

Source: Microsoft | YouTube

Microsoft does not speak much about online advertising. It's understandable in terms of control Google and Facebook are under to rely on consumer data to generate their billions in revenue.

But it's not a business Microsoft has left. On Tuesday, the company's LinkedIn unit announced the acquisition of Drawbridge, which specializes in a type of digital advertising called identity resolution that involves identifying people across different devices and datasets.

Microsoft has a mixed track record in advertising. The once promising Bing search engine is small compared to Google's market leader. In the last quarter, Microsoft had $ 1[ads1].91 billion in search advertising revenue, up 7% from the previous year, accounting for 6.3% of Microsoft's total sales.

The company also generates some advertising revenue from online games and from LinkedIn, a business that accounts for 5.5% of total revenue. Microsoft bought LinkedIn for $ 27 billion in 2016.

LinkedIn displays several types of ads to its members, including native "sponsored content" ads that appear in the app's main feed, custom "dynamic" ads, and sponsored InMail messages. These are all part of LinkedIn's media business, which the company told Axios in November, should exceed NOK 2 billion in revenue in Microsoft's current fiscal year.

The purchase of Drawbridge, which was insufficient for it not to expose Microsoft to the Terms, is intended to help advertisers measure the return on investment for campaigns they launch on desktop and mobile devices, as well as expand the range of campaigns, a LinkedIn spokesperson CNBC on Tuesday. Mobile devices account for most advertising obligations, but most conversions ads that lead to purchases happen on desktop.

LinkedIn has work to do to give advertisers the types of tools they can get on multiple consumer-focused ad plans, said Forrester analyst Joe Stanhope.

"Because LinkedIn has probably focused on more B2B-oriented applications and advertising needs, they still play input with some of the really big traditional platforms, such as Facebook or Snap or Google," Stanhope said. [19659002] Drawbridge customers include Adobe, Criteo and IBM, according to their website.

Last year, Microsoft made commercial LinkedIn revenue part of its carefully watched Commercial Cloud metric, which includes, among other things, Azure public cloud. But LinkedIn's advertising offer was not included in the move. Revenue in the industry, which LinkedIn calls Marketing Solutions, grew 46% in the last quarter, the spokesman said.

With LinkedIn, Microsoft acquired a growing and quite significant advertising business. The company tried to make a big splash in online advertising in 2007, when it bought aQuantive for $ 6 billion. This deal was a bust and resulted in a write-down of $ 6.2 billion in 2012. In 2008, Microsoft tried to buy Yahoo in what would be one of the biggest technology companies ever, but Yahoo fought for the effort and Microsoft otherwise pulled out suggestion.

– CNBCs Megan Graham contributed to this report.

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