Microsoft's purchase of Drawbridge deepens online advertising

Microsoft does not talk much about online advertising. This is understandable given the minutia of Google and Facebook companies that use consumer data to generate billions of dollars in revenue.

But this is not a business that Microsoft has abandoned. On Tuesday, the company's LinkedIn unit announced the acquisition of Drawbridge, specializing in a type of digital advertising called identity resolution, which involves identifying people on different devices and data sets.

Microsoft has a mixed track record in advertising. Its once-promising Bing search engine is tiny compared to the Google market leader. In the last quarter, Microsoft generated $ 1.91 billion in search advertising revenue, up 7% from the previous year, representing 6.3% of Microsoft's total sales.

The company also generates advertising revenue from online gaming and LinkedIn, a company accounting for 5.5% of total revenue. Microsoft bought LinkedIn for $ 27 billion in 2016.

LinkedIn broadcasts several types of ads to its members, including native "sponsored content" ads that appear in the app's main stream, custom "dynamic" ads, and sponsored InMail messages. All of this is part of LinkedIn's media industry, which the company expects to generate in November a turnover exceeding $ 2 billion during Microsoft's current fiscal year.

The purchase of Drawbridge, which was small enough to not force Microsoft to disclose terms, is designed to help advertisers measure the ROI of campaigns they launch on desktops and mobile devices. as well as to expand the reach of their campaigns. campaign, a spokesman for LinkedIn told CNBC on Tuesday. Mobile devices make up the majority of ads, but most conversions– ads that lead to shopping – arrive on desktops.

Joe Stanhope, an badyst at Forrester, said LinkedIn needed to provide advertisers with the kind of tools they could get on more consumer-centric ad platforms.

"Because LinkedIn is probably focused on use cases and more B2B-oriented advertising needs, they are still trying to catch up with some of the very big traditional platforms, such as Facebook, Snap or Google," he says. said Stanhope.

Drawbridge customers include Adobe, Criteo and IBM, according to its website.

Last year, Microsoft integrated the LinkedIn business number with its closely monitored Commercial Cloud indicator, which includes the Azure public cloud. But LinkedIn's advertising offerings were not included in the move. The revenues of this company, which LinkedIn calls Marketing Solutions, have increased by 46% in the last quarter, the spokesman said.

With LinkedIn, Microsoft has acquired a growing and relatively large advertising business. The company tried to make waves in online advertising in 2007, when it acquired aQuantive for $ 6 billion. This deal was a failure and resulted in a $ 6.2 billion write-down in 2012. In 2008, Microsoft had attempted to buy Yahoo in what would have been one of the biggest technology deals of its history, but the latter fought and Microsoft finally withdrew the proposal.

– Megan Graham of CNBC contributed to this report.

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