Microsoft in Talks to Sell Atlas Ad-Serving Business to AppNexus

Adobe and MediaOcean Have Kicked the Tires as Microsoft Looks to Get Out of Ad Tech

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AppNexus, the New York-based ad-tech company, is in discussions to purchase the Atlas ad-serving business from Microsoft, according to two people familiar with the process.

This is not the first time the two companies have engaged in discussions about a deal, but the talks are said to be as serious as ever as Microsoft pushes to finalize a sale before year's end.

While AppNexus is currently viewed as the frontrunner, other companies have submitted bids, one of these people cautioned. It's not clear who those others bidders are, though there's been speculation that Adobe could be one.

At the same time, a person familiar with Adobe's plans said that the company looked into Atlas, but passed. Mediaocean, which has strong agency relationships and is trying to build the pipes connecting all buy-side processes, could also be a dark-horse player.

Microsoft is aiming to decide on an acquirer before year's end, as it shifts strategy from owning ad tech to partnering with outside vendors.

AppNexus CEO Brian O'Kelley declined to comment. Mediaocean also declined to comment.

While Atlas still has some big brand and agency clients who use it to serve and track online ad campaigns, its market share has suffered as it loses out to other top ad servers, such as Doubleclick for Advertisers.

In July, Mr. O'Kelley said as much when he told Ad Age that it was "worth investigating" an acquisition of Atlas.

"Microsoft either has to invest heavily in Atlas to get rid of those disgruntled customers or I think they do need to find a happy home for it," he said at the time. "I have no idea if we could afford it or if it would be a good fit."

At the time, Mr. O'Kelley hinted that owning the Atlas business could help AppNexus build direct relationships with big marketers.

"To date, Atlas has a lot of customers that are marketers; AT&T is a good example of a historical customer," he said at the time. "We haven't really been in that business very much."

The acquisition would also give AppNexus a look into, and data on, ad campaigns that don't run through real-time-bidding and another piece on its mission to building a real end-to-end ad-tech competitor to Google.

Microsoft spokesman Tom Phillips would not confirm or deny the current talks.

"We have received inquiries from time to time on Atlas and some of our others assets," he said. "It's not a new thing that Atlas has been in that kind of discussion. Other than that , we really don't have anything to report."

Microsoft, of course, owns a piece of AppNexus thanks to its participation in AppNexus' $50 million investment round in 2010. It also runs an ad exchange using AppNexus technology. If AppNexus were to acquire Atlas, it's possible that Microsoft would receive more AppNexus equity.

Microsoft acquired Atlas as part of its $6.2 billion aQuantive deal in 2007 when it was busy competing with Google to build the pipes that power online advertising. Now Microsoft is more focused on its own platforms and technologies like Windows 8 and Xbox; rather than own the advertising technology, it would prefer to select from an array of outside companies, as it did with AppNexus last year.

Microsoft's online services division -- which includes its online ad business -- lost $364 million in the third quarter, compared to $514 million in the same quarter last year.

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