Tuesday, July 31, 2007

Microsoft buys local tech firm


Microsoft recently snapped up Carpinteria-based AdECN, a company that operates an electronic marketplace for the buying and selling of online advertising space.
AdECN founder and CEO William Urschel said the acquisition should bring 40 new jobs to his company and greatly increase revenue.

“We’re going to see a thousand-fold increase in our traffic over the past year,” Urschel said.
Financial terms of the deal were not released. Urschel said while Microsoft will own AdECN stock, it will remain an independent company with its own engineering team and staff.
“It’s an unusual move for Microsoft,” Urschel said. “Usually they just bring in their own people and product line.”
Nearly 40 major advertising networks use the AdECN server, representing hundreds of thousands of advertisers and website owners. The exchange facilitates connections between those trying to find spots for ads online and those offering space on their website.
ECN stands for electronic communication network, essentially a real-time, automated, auction-based exchange similar to the stock market, Urschel explained. Instead of stocks, however, members of the AdECN exchange trade spots on websites where banner ads are displayed.
Publishers offer up their inventory, or ad space on their website, defining the dimensions of the space, content allowed and the nature of the site. Advertisers describe the ad they want to run, who they want to target and how much they are willing to pay.
When a person visits a website, an auction lasting 12 milliseconds takes place and the highest bidder’s ad is loaded. Urschel said the exchange is much more efficient than each advertiser and each website owner trying to find a match on their own.
“Microsoft realized that somebody was going to come up with a good exchange, and it was going to be the crossroads of Internet advertising,” Urschel said.
Kevin Johnson, president of the Platforms and Services Division at Microsoft, said in a statement that Microsoft believes the advertising exchange will help advertisers and publishers maximize their investments.
“We believe the addition of AdECN to the Microsoft portfolio is a perfect fit and will create more efficiency for the industry by forming a more robust marketplace,” Johnson stated, adding, “This is good for the whole advertising industry.”
AdECN formed first as an ad network in 2004 before evolving into a neutral ad exchange in late 2005. Urschel said he plans to keep the business where it is, saying, “Carp is a great town.”
Microsoft and its clients will be using the exchange to sell and buy advertising space, which is one reason why they are trying to keep AdECN as independent as possible, Urschel said. Microsoft entities will also sign membership agreements and will pay the same fees as anyone else using the exchange.
By acquiring the exchange, Urschel said, Microsoft is greatly enhancing their footprint in the advertising industry and will be the only company offering a central hub for anyone who wants to buy or sell Internet ad space.
“They are certainly going to make a lot of money,” he said. “But they want it to be neutral. They don’t want Yahoo or Google to take it over.”

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