Microsoft buys another online ad company

By Yi-Wyn Yen

Microsoft on Friday bought Rapt, a San Francisco-based online ad management firm, for an undisclosed sum. The move came three days after Google cleared its $3.1 billion acquisition of the ad serving company DoubleClick.

Both acquisitions are a sign of the heated battle between the search giant and the software giant for a share of the growing display advertising market. Microsoft (MSFT) has made aggressive moves into that market ever since Google (GOOG) announced its intention to buy DoubleClick last April. Since then Microsoft has spent $6 billion to buy aQuantive, an ad network that competes with Google’s AdSense, and last month made an unsolicited offer of more than $40 billion to take over Yahoo (YHOO). The Wall Street Journal reported that executives from both Microsoft and Yahoo met near Yahoo’s headquarters in Sunnyvale on Monday to have informal talks for the first time.

Microsoft sees its newest acquisition as a way to compete with Google’s DoubleClick, which serves ads for both advertisers and publishers. By adding Rapt, an inventory management software service for publishers, Microsoft now works with half of the top 25 online publishers, including Yahoo, CNET, and Fox Interactive Media (NWS).

“This is certainly an interesting and relevant move for Microsoft,” Rapt CEO Tom Chavez told Fortune. “Our approach is that publishers are customers. They need to know what their inventory is, where they’re losing and making money. We’re betting that publishers are going to need access to the technology to manage that. Microsoft’s approach is that we need to give folks choices.”