Microsoft enters TV ad business with Navic buy
Playing a little bit of catch-up to rival Google, Microsoft announced the acquisition of Navic Networks on Wednesday, giving it a foothold in the television advertising business.
The interactive TV advertising market has been considered a "new and burgeoning" industry for well over a decade now, and for perhaps all of that time, Microsoft has been working to gain a competitive position there. But this morning's announced acquisition of interactive ad platform provider Navic Networks is being perceived as a catch-up play with Google, whose recent deal with Dish Network has been the talk of the industry.
With all television going digital soon, many TVs and HDTVs will be using new, next-generation set-top boxes, and some displays will already have STB technology built-in. Those STBs will be the interactive channel-changers, some with built-in TV Guide, and many with on-demand movie and show selection functionality.
It's Navic's Admira advertising platform that plays to these STBs, with the capability of delivering highly targeted ads, similar in concept to behavioral targeting platforms on the Internet now, but directed toward TV viewers. For years, Microsoft has wanted to build a similar platform; today, it announced it has decided to buy a fully established one instead.
Navic's technology works much like the popups that TiVo customers have recently become accustomed to when seeing some ads. Targeting by ZIP code -- and perhaps deeper -- allows advertisers using the functionality to micro-target consumers, enabling them to click on an overlay to see additional information on the product.
One thing that is missing from Navic's offering is any kind of tie-in to Web advertising. Microsoft may seek to leverage its adCenter program to make Navic's services more attractive to potential clients.
That seems like it is what the two companies plan to do. "While our current business relationships will continue to grow, we look forward to extending our technology into a vast array of new markets and software solutions," CEO Chet Kanojia said.
Financial terms of the deal were not disclosed, although news reports indicate Microsoft may have paid anywhere between $200 and 300 million for Navic. The company will become a wholly-owned subsidiary of the Redmond company, and will be folded into the Advertiser and Publisher Solutions Group, which is lead by Brian McAndrews.
Microsoft is still trailing behind Google when it comes to advertising. In the most recent quarter, Google's advertising revenues totaled $5.1 billion: The Redmond company managed to generate $843 million in revenue from its Online services business, which includes its advertising endeavors.