Scott Ferris, general manager of Microsoft's advertiser and publisher solutions group, told Ad Age the Waltham, Mass.-based Navic allows the company to "take advantage of new-media formats through interactive TV and the measurement of TV viewing for the purpose of having a more efficient marketplace for buyers and sellers." Neither company could disclose specific financial terms of the acquisition.
Targeting, not selling
Unlike Google TV, which sells TV advertising via an auction-based model and aims to measure the performance of individual ads based on viewer drop-off during commercial breaks, Microsoft will not be selling any of the ads run by the Navic platform. Instead, Microsoft is aiming to provide scaleable targeting solutions for ad clients without making publishers and buyers compete against each other so openly.
"We let the marketer do their work as opposed to saying, 'Hey, we can do an auction.' We want to help solve the marketing problem on TV," said Chet Kanojia, CEO of Navic Networks. He said that using Admira, Navic's ad network, the "publishers control the pricing and packaging but the buyers do buy through the platform. We have a small sales force that see the advertising but promotes the system into agencies. We participate in revenue flowing thru Admira."
The race to own the web's platform is still very much alive and well. Like Google, Microsoft has ambitions in the online ad space to be the platform through which ads flow -- to use targeting and technology to make publisher inventory more valuable and give advertisers better returns.
Tool for publishers
While Microsoft could make some money as a licenser of technology, it expects to make the bulk of its money by selling ads. It sees its network as just another tool to help publishers make money off inventory they may not be able to sell themselves.
The way Navic fits into the TV ad model is similar to how Atlas, aQuantive's ad-serving technology, or Rapt, a recently acquired company that helps publishers manage their inventory, fits into the online ad model: It is a behind-the-scenes enabler. In the end, it should do for the TV ad platform what Microsoft wants to do for the web: It uses targeting and interactivity to make cable inventory more valuable and advertising more effective.
Microsoft CEO Steve Ballmer believes that all media will be digital within the next 10 years -- and that means TV content will be delivered over IP networks.
Shift to digital
"Within 10 years, no consumption of anything we think of as media today -- print, TV -- will in fact be delivered over internet technology. It will all be digital," said Mr. Ballmer at the Association of National Advertisers' annual conference in October.
The Navic acquisition comes at a time when the company is trying to rebound in the arena of public perception. Microsoft is fresh off a failed $40 billion-plus bid to acquire Yahoo that left investors and industry pundits perplexed as to the software giant's options to be a major online ad seller. After four months of Microsoft wooing with full or partial acquisitions, Yahoo broke off talks last week and signed a deal to outsource a portion of its search-advertising business to Google.
In the case of Navic, scaling its addressable ad solutions has been a challenge for the company and all the other technology vendors who've emerged in recent years to try and innovate TV advertising, Backchannel Media, Visible World and Invidi among them. Navic's platform is most prominent in regions such as Southern California, where viewership data from operators including Time Warner Cable and Charter Communications can be retrieved within 24 to 36 hours for clients.
The addressable advertising market has had major momentum in recent months in the wake of Project Canoe, a consortium of the country's top cable operators whose mission is to create universal metrics for video on-demand ad opportunities to national advertisers. Part of Canoe's initiative will be to introduce its own addressable and interactive ad products to the marketplace, with an additional data-and-analytics product to help advertisers assess the effectiveness of Canoe's ad-serving technology. Just last week, the venture officially appointed its new CEO, David Verklin, former CEO of Aegis Media Group.
Navic also has a high-profile agency vet on its side. Former Initiative CEO Alec Gerster joined the company in April as its chief marketing officer.