This is an interesting situation for many reasons and Mike Butcher of TechCrunch Europe analyzed what the players are probably thinking right now.

His conclusion is that this is a binary situation where if Twitter fails to buy TweetDeck they will be potentially losing a lot of future revenue or enabling a rival network. Therefore, Twitter must spend what it takes to buy TweetDeck.

I don’t think this situation is so black and white. There are other options and outcomes here, and it’s fun to think through some of this corporate strategy as an outsider.

Here are some other potential outcomes:

TweetDeck Goes It Alone
While most would think that TweetDeck would have to be crazy to not sell now while they have two acquirers feeling that they are key to their futures, there is the option to go it alone.

Why couldn’t TweetDeck go raise more money, take a little off the table for the founders, and either try and build their own Twitter rival or build a sales team and sell ads on their own? Going the acquisition route can obviously be a nice exit, but it also could see their company vision and dream die inside another company.

UberMedia Buys TweetDeck, Twitter Freezes Them Out
Mike Butcher seems to imply that if UberMedia had TweetDeck and all those influential users they’d be able to start their own network successfully or at least put the screws to Twitter to let them sell ads. Why couldn’t Twitter just say “Screw you, the TweetDeck users are more loyal to Twitter itself than TweetDeck.”

While denying TweetDeck users access to Twitter’s network would be seen as a bad PR move and piss off a lot of people, I have a feeling all those TweetDeck power users would move to an alternative client to get access to Twitter.

UberMedia Buys TweetDeck, Twitter Lets them Start a Rival
Again, I wouldn’t assume that if UberMedia started a competitor that people would be more loyal to their client application than they are to all the users on the Twitter.

This might depend on interoperability, but I know that I would ditch TweetDeck for another client if it was only accessing a much smaller network that lacked all the people I was already following and who followed me on Twitter.

It will be interesting to see how this plays out, but I don’t think it’s as simple as “whoever buys TweetDeck wins”. It’s an important piece of the puzzle, but I think there are more layers here than instant winning and losing based on who grabs it.

This leaves me with a big question though, why didn’t Yahoo! buy the Huffington Post? Let’s look at some data points:

• There were rumors during the summer that Yahoo! was in some sort of acquisition talks with the Huffington Post.
• Huffington Post CEO Eric Hippeau was on the board of Yahoo!, and just stepped down a few days ago, most likely related to this deal and his new job at Lerer Ventures since he’s not joining AOL as part of the deal. Him being on the board obviously means Yahoo! was fully aware of the Huffington Post and it’s business. Did Hippeau know things about Yahoo! that made him not want to sell to them?
• Huffington Post sales head Greg Coleman was previously the sales head at Yahoo! followed very briefly by being the sales boss at AOL. When AOL CEO Tim Armstrong joined, one of his first moves was parting ways through Coleman, and he apparently won’t be joining as part of the deal either. But, Coleman was obviously still pretty familiar with Yahoo! as well.
• Arianna Huffington spoke at a Yahoo! North America all hands in the past year.
• Besides all these connections, Yahoo!’s strategy these days seems very similar to AOL in it’s focus on content and cementing itself as the leading new media company. The Yahoo! acquisition of Associated Content was a similar move to AOL growing it’s Seed.com content creation arm, and both companies have been hiring more original content creators and growing their businesses in these areas.

So why didn’t Yahoo! buy Huffington Post? Some thoughts:

• Was Huffington Post not interested in being acquired by Yahoo? Has AOL become a better destination to go work? Are Armstrong’s bold moves like buying TechCrunch make it look more forward thinking? I’d guess this may be part of it. As Keith Rabois tweeted “Interestingly, Aol has now become a substantially more attractive acquirer for startups/entrepreneurs than yahoo.”
• Was it price? This seems doubtful. Maybe back in the summer Yahoo! didn’t want to pay this much, but if they knew Huffington Post was going to AOL, couldn’t they have outbid AOL? Yahoo! has more cash, so I don’t think this is a bidding war that AOL won.
• Was it location? AOL has a larger presence in New York than Yahoo!, so the Huffington Post team may have felt more like they were in the center of the action and less likely to be orphaned than they might be my Yahoo! who is headquartered in Silicon Valley.
• Was it vision? Is Armstrong and AOL just being more clear about what they are and where they are going? I think this is probably the case as well.
• Did Yahoo! not want to buy Huffington Post? The news from the summer that Yahoo! was very interested in acquiring them makes this seem unlikely, but strategies and opinions do change. It’s tough to know from the outside if Yahoo! was still heavily interested. It’s definitely possible that Yahoo! has other plans that don’t involve major acquisitions moving forward.

The bottom line is that I think Yahoo! should have bought Huffington Post. If their strategy is to be a major content player, Huffington Post was one of the key properties in the landscape and their team has a lot of knowledge and skill in working in the new social landscape of media. A lot of that could have rubbed off on Yahoo!.

Will Yahoo! counter with their own major media acquisition? Glam? Sugar Inc.? Someone else? Or is Yahoo! blazing their own path that won’t be focused on acquisitions?

This is simply my perspective as I know that others at Right Media and Yahoo! had completely different opinions and feelings about everything that occurred from 2004-2010. That being said, let’s take a walk down memory lane.

Joining Right Media

In late 2004 when my longtime friend Brian O’Kelley (currently CEO of AppNexus) reached out to me to see if I wanted to join a startup called Right Media. Brian was the CTO of Right Media and had built some interesting auction technology for their ad server. They wanted to start going more aggressively after publishers and he thought I’d be able to help with that effort.

I had a good job I enjoyed at Palo Alto Software, a Eugene-based business that is the leader in the business planning software space. I had worked there for four years and was managing a small team running their ecommerce site PaloAlto.com, as well as their main content properties Bplans.com and Mplans.com. In my spare time at night, I also was operating a site I started in 1997 called Wakeboarder.com that I later sold in 2006.

Despite the good job, I wanted the opportunity to join a younger startup and online advertising was a field that I had good experience in and was passionate about. My role was to do business development, product, and support work for medium to small publishers for Right Media’s ad network. Additionally, I looked forward to working with Brian again as we had started our first web business together in 1995 and worked together numerous times since (including a fun dot-com bomb in 1999).

Right Media was a New York company, but when I joined I made it clear I had no plans to move from Eugene. Fortunately, Brian and the rest of the executive team (Michael Walrath, CEO and Christine Hunsicker, COO) allowed me to start building a publisher-focused team in Eugene. When I joined my wife was excited for me to be able to work from home since we had recently had our 2nd child. However, after a month I had already hired three great people and found office space. It was off to the races.

Right Media Growth

When I joined, Right Media was an ad network with some interesting and differentiated auction technology that helped power the network. It had not yet become an ad exchange, but the ad network itself was growing well. I helped build Right Media’s self-service publisher signup, and we began bringing in publishers at a steady clip. it’s funny now to think back to 2005 and how we were talking to publishers like “TheFacebook.com” which was at the time a few young college kids who didn’t know much about advertising for their college social network.

Not too long after getting the office space setup in Eugene the company started making the move to the crazy concept of an ad exchange. We had to go sell other ad networks who were our competitors to use the Right Media Exchange as their ad server or as an additional place to access supply and demand. It was a strange notion to many people externally, but it made a lot of sense to everyone within the company. Even then we didn’t know what would happen when we connected our ad network to another ad network to see how the buying and selling would perform on one platform. Fortunately, it worked quite well.

The Eugene Office Entrance

The time during 2005-2007 was amazing as every month saw growth and progress in the business. The Exchange continued to grow, improve in quality, and it started making real waves within the online advertising industry. We felt like underdogs taking on the establishment to change the industry, which is one of those things that makes startups so much fun and addicting to many people.

There were problems with quality, hiccups with the exchange scaling, and problems with spyware and other issues that the company took very seriously and worked through diligently. I think those things really kept us on our toes and kept us so busy that you really couldn’t stop and marvel at the fact that we were doing billions of impressions per day by the time 2007 hit.

During 2006 though our team in Eugene had noticed that small to medium publishers were having a tough time working with the complexity of the Right Media Exchange. We used the APIs to build RMX Direct which was later renamed to Direct Media Exchange.

This product was the first self-service publisher yield optimizer that was a simple ad server that allowed publishers to get demand from the Exchange while also managing and auctioning their inventory to 3rd party ad networks like Google Adsense, Valueclick, and others. This was a forefather to the products later built by companies like Pubmatic, the Rubicon Project, and AdMeld.

Direct Media Exchange also was experiencing the same kind of rapid growth and success of the Right Media Exchange, but at a smaller scale that was a bit more under the radar. The team in Eugene was pretty proud of what we’d built together.

Pre-Acquisition

My first personal experience with Yahoo! directly came in 2006 during Ad Tech San Francisco. At about 10 am on the first day, Brian told me that he had a meeting scheduled with Yahoo! down in Sunnyvale that afternoon that he could no longer make due to an important meeting at Ad Tech. He suggested I go along with Ant Taylor and Kees Schouten who were both at Ad Tech as well. What was interesting about this was that Ant and Kees were actually in their first week on the job at Right Media and didn’t even really know what their roles were yet. Additionally, I had no context for the meeting besides that “we are talking to Yahoo! about becoming a client.”

We headed down to Sunnyvale and met with Ryan Christensen, who was doing Pricing and Yield Management for Yahoo!’s display business. We managed to get through the meeting even though we lacked context and really spent most of the time learning about how Yahoo! was currently running their non-guaranteed business and talking about how Right Media’s Exchange could help with some of those problems.

Later that summer I was in New York when a group from Yahoo! came to meet with the Right Media executive team. The morning of the meeting, Ant and I were tasked with building a presentation for one portion of the meeting. As a great example of the hectic pace of the startup world, we again lacked context and tried to scrap our way through it anyway. As you’d expect, we created a terrible presentation that wasn’t usable for the meeting. The meeting apparently went well, but the panic I felt that morning was something I’ll never forget.

In October of of 2006 things really started to get more real as Yahoo! invested $40 million into Right Media for 20% of the company and to become a major client of the Exchange. This was a huge win both from a company stability perspective financially, but it also provided a marquee quality client who validated the Exchange in the eyes of the industry.

Of course, there were feelings internally and rumors abound through the rest of 2006 and early 2007 that Yahoo! might want the whole company. As visitors from Yahoo! became more frequent to the offices in 2007, it was a not so subtle secret they were doing due diligence and diving deeper on our technology.

After spending Monday through Thursday at a conference my flighted landed in Eugene and I received a call from Christine Hunsicker our COO. She said I needed to be in New York by 9:00 am the following morning to demo Direct Media Exchange to people from Yahoo! and to bring along our lead product manager and lead engineer for the product. I told her this would be tough as I hadn’t been home all week and it was already Thursday afternoon. She said she wasn’t asking if I could do it or not, so we drove the two hours to Portland to take a red eye to New York.

We flew all night, changed in the bathroom at JFK, and then made it to the Right Media offices a bit late. The three of us walked into the main Right Media conference room where there was a few Right Media executives and then a number of executives from Yahoo!. At the time I wasn’t familiar with any of the Yahoo! executives as it was my first time meeting them, but it was a pretty high-powered tech crowd in the room consisting of SVP of Product Mark Morrissey, SVP of Engineering David Ku, Chief Scientist Qi Lu (now the President of Online Services at Microsoft), VP of Product John Slade, and halfway through the meeting Jerry Yang also made an appearance.

We were asked to demo Direct Media Exchange so we connected our product manager’s laptop to the projector. Remember, this was after a night of travel and no sleep. As the demo begins, the first thing everyone notices is his Firefox toolbar is set to Google as the default search engine. Oops, strike one!

After some half-joking and half-serious comments about the toolbar, I gave an introduction to the product and ask our product manager to login to the application. He then clicked on the username form field and hesitated. I wasn’t sure why he was doing so, but he gave me a look that let me know something was wrong. I urged him to proceed, and he typed in a Gmail address to login to the application. Apparently it was the only address he had with administrative priviledges. Oops, strike two!

We endured some more jokes that were increasingly serious, but then continued to give a quality demo of the application with plenty of good dialog. I thought we’d moved past the early mistakes when we were asked whether we were building a specific future enhancement. Our product manager responded “Absolutely, I’ve already created some mockups I can show you.” I wanted to bang my head on the desk at that point, as I knew what was coming and he opened up mockups that he’d recently created in MS Paint. That’s right, they were screenshots of our app with hand-drawn new features scribbled on it. A true professional mockup! Strike three?

Fortunately, the strength of what we’d built and the traction we’d achieved with Direct Media Exchange in the demo was what ended up hopefully being memorable. The company overall ended up being a compelling option for Yahoo! after Google had just ponied up $3.1 billion for DoubleClick just a few weeks earlier. Yahoo! purchased the remaining 80% of Right Media it didn’t already own for $680M making it one of the largest ad technology acquisitions of all time.

The Acquisition

Getting acquired is an extremely interesting experience. Of course the team celebrated, as it was a large acquisition and it really validates what you’ve been working so hard on. This was the goal right? Or at least one of the big goals?

On one hand you are happy knowing that your company’s stock is now liquid, and you have the hope of the business becoming even bigger and achieving more success with the “endless” resources of the acquiring company. It was also exciting to go work for one of the pioneers of the web who had big businesses in so many areas online.

However, even having never been through an acquisition, I knew many things were going to change. Immediately the people in our Eugene office began to wonder what would happen to them and if our Eugene office would be closed. At this point we had over 30 employees in our Eugene office but people wondered if they’d have new managers, if they’d be laid off, and what would happen to the products they were working on.

The acquisition process and integration itself for me personally was good. It could have been improved probably with more structured education on Yahoo!’s businesses and such, but I felt very welcomed by employees at Yahoo!, and got to immediately start spending time in various Yahoo! offices teaching people about Right Media and what we did.

On my first trip to the Burbank office a group of employees I had just met invited me with them to an Anaheim Might Ducks playoff hockey game. It was a good experience to get to know them personally and see my first live hockey game at the same time.

Moving to their IT systems and and way of working was also pretty easy, but there were still challenging questions the companies had to work through. What would happen to the Right Media brand? Do we integrate websites? What do we switch to Yahoo! technology and what don’t we? Can we still use Google Analytics to track our sites? Most of these things got resolved over time without too much trouble.

Post-Acquisition

After the honeymoon period was over more challenges began to pop up. Specifically, there were strategic questions that showed everyone was not perfectly aligned on where everything was headed and how it should be built. Should we build on top of the existing Right Media technology? Should we start and build a new ad platform from scratch that has the functionality of Right Media combined with the guaranteed ad serving system Yahoo! had built in house?

After the decision was made to build a new platform from scratch (APT) there were then issues trying to keep building Right Media Exchange functionality as many engineers had been moved to work on the new project. Additionally, many engineers had to work on scaling Right Media itself with all of Yahoo!’s added volume and integrating with Yahoo!’s finance systems. This left little room in the road map to keep pushing Right Media as hard as many of us had hoped.

Despite this, there was a lot of excitement over the new system being built and the strategies to do some amazing thing in the display advertising space.

Personally, I had been promoted and was excited about taking on responsibilities at Yahoo! that also went outside of Right Media. It was interesting to learn about new areas of Yahoo!’s business and work with so many new people within the company. I’ve heard other acquisition stories where people from acquired companies were buried in the bigger organization and not given prominent roles. Yahoo! definitely gave various people at Right Media strong roles within the company, although there are definitely people who did get stuck in unfortunate situations.

Microsoft Acquisition Attempt

Not too long after getting settled in at Yahoo!, Terry Semel was replaced with Jerry Yang as the CEO and Microsoft went public with their acquisition offer. This was a very interesting time to say the least. It was a rapid ascent to being a startup striving for attention every day to having Yahoo! on every news site all day long with rumors and speculation about the Microsoft acquisition. People tried to not make it a distraction, but I think everyone would be lying if they said there wasn’t a lot of time spent reading that speculation online every day and talking casually around the offices about the situation. For the most part it seemed like most projects kept their momentum as everyone knew that it was a long way from happening for sure.

Everyone I talked to internally loved the idea of locking in a stock price in the $30s, but no one was very excited about having to integrate two companies of that size with different cultures and missions. I felt the same way, and was wondering what would happen to Right Media in the situation of an acquisition.

Of course, it all fell apart. It was followed by the attempted search deal with Google and it ended Jerry’s time at CEO. In retrospect based on the stock price alone you’d have to classify that it was a mistake for Yahoo! to not take one of the Microsoft offers. However, Yahoo! is still a profitable independent company today which I’d say is better for the overall health of the web than if the acquisition had been successful.

Besides the Microsoft acquisition, Yahoo!’s display strategy was also affected by the economy going into the recession. A lot of the ideas around building guaranteed cross-selling relationships for display didn’t make a ton of sense when every publisher was struggling to sell their own inventory alone. This turned a lot of the development of the APT platform to be on building it internally for Yahoo! while continuing to support the Newspaper Consortium who was using the product to run their display ad businesses and sell Yahoo!’s inventory to local advertisers.

The soured economy led to two rounds of layoffs as well. Laying off members of my team and seeing former Right Media employees in Eugene was definitely the lowest point at Yahoo!. Some of the decisions on who to layoff just didn’t seem to make any sense, although struggling to figure it out has never gotten me anywhere. That being said, the company definitely felt overstaffed to me at the time, so it seemed like layoffs did make sense for Yahoo! overall.

The New Yahoo!

After all that drama, Carol Bartz was brought in as CEO and began to make changes throughout the company. Carol did a nice job shutting down certain products and businesses, selling some pieces of Yahoo!, and the change brought some executive turnover and org structure changes.

Unfortunately, one of those products that got shuttered was Direct Media Exchange. While it was sad for our team in Eugene who built it, the reality was that the code hadn’t been touched since the Right Media acquisition. The product had continued to grow and was doing over 20 billion impressions a month and was easily profitable since there was only a small team doing customer support for it. I was a believer though in the company’s mission to focus, and smaller publishers were not a priority of the company as also demonstrated by the shutting down of the Yahoo! Publisher Network product for small publishers.

The major area though that Carol “outsourced” was the search technology business to Microsoft. This became a huge strategic focus for the company and I took the opportunity to move completely out of the Exchange area into B2B Marketing to run the marketing for the Search Alliance with Microsoft. It was a nice change of pace to work on search, work with Microsoft directly, and to work with a new group within Yahoo!.

During this period our office in Eugene was closed as our lease ran out and we were down from 30+ employees to 7 after the two rounds of layoffs, people moving to other Yahoo! offices, or leaving for other job opportunities altogether.

It became clear to me over this time though that I was getting the entrepreneurial itch again and I wanted to get back to building products. One of nice things about a big company is there are specialists to perform almost every task, but I felt more and more like I spent my whole day just talking to people internally while doing status reports and internal presentations. While there is some value in that, it feels like I was disconnected from products and customers. I could have explored moving into other parts of Yahoo!, but I really wanted to start a company and get back to being an entrepreneur.

Overall

The bottom line was the whole thing was a positive experience for me. I’m glad Brian initially recruited me into it and that the Right Media executive team was supportive of building a presence in Eugene.

It’s interesting though is how perspectives can differ, because I know some people at Right Media felt the acquisition was a very negative experience for them. For me though it was positive to have Right Media stock become liquid, I was exposed to many things I never would have learned in a startup or small company, and I got to have front row seats to some very interesting things happening in technology. The best part really may have been many of the friends I made along the way, many of whom I’m sure I’ll work with again. Not a bad way at all to spend the early part of my 30s.

I wish the ending would have turned out different for Direct Media Exchange, and I wish the momentum of the Right Media Exchange wouldn’t have slowed down. As I was leaving Yahoo! though, it appeared that more emphasis was being put back on that business so hopefully that continues that way.

There has been considerable speculation about why Google not only purchased Admob, but spent so much money in doing so. The obvious off the cuff answer is to get their hooks into the mobile display advertising space by acquiring the most well-known mobile ad network. Some people such as Niki Scevak don’t think that’s a particularly good idea, and others such as Silicon Alley Insider seemed to have to work a bit to justify it.

While Niki makes some decent points about mobile advertising being tied to mobile commerce, and mobile commerce not being a huge market yet, I think the question I’d ask here is how will mobile commerce NOT become huge over the next few years? Mobile phone usage is skyrocketing and innovations such as the iPhone, Droid, and phones and software yet to be developed are going to keep that pace of innovation and change going. While I’m probably an early adopter, I’ve conducted numerous ecommerce transactions through my iPhone and in fact bought a book for my iPhone Kindle App just today. While I didn’t see an ad for this book on my phone, why couldn’t I have seen one that drove me to the purchase?

Regardless, I don’t think the mobile ad network is Google’s sole motive, and perhaps not even it’s strongest motive for the acquisition. I think John Battelle and Ian Schafer nailed this one by pointing out that the key asset for Google is the DATA.

This is data that will obviously help for ad targeting and the like, but getting iPhone app data (and other types of data) will be immensely valuable as Google attempts to take on Apple to own the mobile phone (software) market. The mobile data nut is just being brought to the table and is just now people are beginning to think about cracking it. It’s also worth pointing out some past Right Media colleagues of mine (Greg Yardley and Jesse Rohland) started Pinch Media a while back to handle mobile application analytics. This will be an interesting space to watch moving forward as mobile continues to grow.

That being said, it does seem to open up some interesting possibilities since so much of display advertising is now powered with Adobe’s Flash technology, and that I imagine that Adobe is looking hard at the advertising business as a future growth area for their company.

However, I would’ve thought their move into advertising might have been through the creative/technology door they already had open with advertisers and agencies opposed to through a MAJOR web analytics acquisition. I won’t pretend to say I know if they’re making a mistake, but it will be interesting to watch how Adobe uses Omniture to become a larger internet player.

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Here’s the deals announced over the past week:

Discovery buys Treehugger for $10 million – A single blog that grew into a community with forums and more, but $10 million seems pretty solid for a blog in a specific industry. Although it is a very important and growing industry.

Disney buys Club Penguin for $350 Million or More? – This one looks really bizarre if you had no background on Club Penguin. However, it’s an insanely popular site with kids. One has to wonder though, how long will penguins be the cool virtual pet for kids? Apparently there are earnouts in this deal to the tune of another $350 million. Without really doing much analysis, it feels like Club Penguin’s founders are sitting back laughing they sold a site about being a penguin for at least $350 million.

Handheld Buys Ebaum’s World for $15 million or More? – Another deal that has more earnouts with performance goals. Ebaum’s has been around forever, so you’d wonder why they’d be selling now? And are they kicking themselves they could have been YouTube but just missed out on a few basic things?

Rumor: Sparkpeople to sell for $75 Million – Doesn’t look like this one is confirmed yet, but I’d never heard of Sparkpeople. Apparently it’s the third-largest dieting site. Good for them.

Then we also have publisher success like Markus Frind of PlentyofFish who has long been a proponent of growing independently and not building out a huge business. He’s either announcing he’s for sale as well now, or is really serious about going from a one-man operation to a full-fledged company with employees and a sales team.

What does this recent activity mean? Are we in a bubble where publishers are taking advantage and selling for a crazy premium? To some it seems that way, but in other ways you wonder what would happen if the publishers continued to hold out and grow their business even more. Some of the publishers who sold out back in the early part of this decade would be worth far more today had the stayed independent. At the same time, I think it’s never black and white and in many cases depends on the particular situation each publisher finds themselves in. Can they grow more on their own? Are there more advantages that a bigger parent company can provide to further their mission?

Unfortunately I don’t have the answers, but I think it’s a great time to be a successful web publisher. You can potentially find a solid offer for your business if you wish to be acquired, or you can keep on growing and building. It’s still a very young industry.

One could easily argue that Flickr and del.icio.us were very smart and cheap acquisitions, and that MyBlogLog and others could be much bigger than they are today.

Additionally, it’s nice that Read/Write Web was positive about Yahoo’s investment in my employer Right Media for our ability to monetize display advertising now and what innovations we may bring in the future.

MyBlogLog is pretty fun, kind of a social network for bloggers and blog readers at this point which makes it feel like a blog social network/LinkedIn hybrid, with an added voyeur twist of both seeing who’s browsing your blog or being seen reading other blogs. While I’m not sure it fits perfectly with the social network aspects, MyBlogLog has some simple blog analytics built in as well, so if you have the code for the reader widget like you see in my right sidebar, it also is tracking some basic stats for me.

The analytics it provides are basic but useful for most bloggers, and I actually find myself looking at them more often than some other analytics packages I used or have used simply because I’m using MyBlogLog to add a contact or join a community. So, simply having the location of the analytics being part of something else useful is making mre more likely to use them. They also have a few more advanced analytics that you have to pay to have access for. It’d be interesting to know what percentage of blog publishers are paying for analytics. 5-10% perhaps?

Being that I work for a company that Yahoo is a minority investor in, when I heard about the announcement I immediately started of thinking of ways that the application I head up called RMX Direct could potentially work with MyBlogLog. My immediate thought is that if bloggers using MyBlogLog for analytics, perhaps we could do an intergration of some type to provide ad network management through RMX Direct as well. Perhaps I’ll get in touch!

Who’s been doing it? Well, Yahoo has been a leader due to all the data they have on a user as well as the massive reach, and a couple of ad networks with a focus on it are Tacoda and Revenue Science. You could make an argument that Google is doing behavioral targeting by showing you ads based on what you’re searching for, but I’m not sure it fits the standard definition perfectly.

The concept is great. You store data on users and where they go and what they do, then find them in other places and show them ads related to what they are interested in. The problem is that to work effectively companies end up needing a lot of data and a massive reach to find users they have information on in the right places to show them ads. It’s really been the primary reason that this type of targeting has been slow to pick up.

Now comes news that Microsoft is getting serious about it. I guess they’ve been testing it for over a year, but I was surprised that they weren’t already offering this to advertisers. After I got over that, I read an interesting post on HipMojo.com that theorizes that Microsoft will acquire an advertising network to expand it’s reach. Being that reach has been a problem for behavioral marketers, this seems to make sense. Especially when most people think AOL’s purchase of Advertising.com was a smart move for AOL. Who does HipMojo.com suggest they might acquire?

• aQuantive
• Valueclick
• Tribal Fusion
• Revenue Science
• Tacoda
• etc.

aQuantive is the operator of ad server Atlas DMT which is heavily used by agencies and large online advertisers. That could potentially provide a lot of reach in some ways, but Atlas has not been that known for having publisher relationships, although they recently acquired ad serving company Accipter which is more known to be an ad server for publishers.

Valueclick operates a number of businesses such as Commission Junction so it might be more than Microsoft needs if they’re looking for reach, but Valueclick’s ad network is one of the largest.

Tribal Fusion is more of a pure play network and may have a higher inventory quality than Valueclick, but it’s reach is most likely less.

Revenue Science and Tacoda are both leaders in behavioral targeting so that may make sense for technology reasons, but they also don’t have the reach of the larger players mentioned above.

Many interesting options, and it’s the first prediction I’ve seen that suggests Microsoft would acquire an ad network. In some ways I think it’s unlikely because Microsoft may figure they have the reach they need with all their properties, but I’m not sure they really do on the level they need to make it work. I’m not sure advertisers are thinking of going to Microsoft today as much as Microsoft would like, and maybe an acquisition like this would make them more of a player in the online advertising space.

JB: So you bought Myspace, it exploded. Google bought YouTube. You said that if YouTube had shopped themselves maybe they could get 2 billion, is that what you’d pay?

RL: No, I went on to say we probably wouldn’t participate at the price they sold for. YouTube is a fantastic property. It would have been fun to be involved. It went very fast, and perhaps it was the right deal for both companies.

JB: Give us some insider information, what happened when you heard about the deal? You and the folks at Fox weren’t pleased?

RL: No, that’s not fair. Pre-Google I had always expressed my support and had spent some time wtih Chad and Steve and the VCs there, and expressed an interest that we’d like to be involved if they ever wanted to sell.

JB: So after they sold they made a visit, did they have to make nice since Myspace provides so much traffic to YouTube?

RL: No, they didn’t need to make nice. Google is a large strategic partner for us, they are our largest partner really, and we are a big partner of theirs. When you look across the web, those who are your biggest partners are often your biggest competitors. You just have to manage these relationships and make them work.

JB: So the deal you did with Google and Myspace. $900 million deal across Fox Interactive. What is that $900 million for?

RL: It’s for Google to power search across Fox properties except FoxSports due to our MSN deal. It’s a pretty simple deal although the negotiations were fast and complex. People were saying years ago I was the dumbest guy on the planet and that News Corp was crazy for paying what we did for Myspace. You’re neither as dumb or smart as people make it seem. This is a hard business, nothing is as it seems. It wasn’t as bad a deal as it seemed at the time, and if we don’t pay 100% attention to it and grow it, it won’t be as good as some think it is now.

JB: Myspace streams more videos than YouTube, so really that price tag for it’s worth is now over 1.65 billion. Do you plan on ever selling it?

RL: You’d have to ask Rupert, but we have no plans to do so. But never say never.

JB: According to Nielsen, traffic declined at Myspace from August to September. Are you worried about that?

RL: I’m not worried, most sites are down at that time of year, it’s seasonal, and we had a similar dip a year ago. We’re launching internationally, Myspace Japan, etc. We added 320k profiles yesterday, that’s like the size of Buffalo. Time spent on the site has grown 30% in the last 6 months, and we’re up to 38 billion page views a month.

JB: What do you look for in a company when you’re thinking about an acquisition, and are you still looking?

RL: IF we’re not looking we’re not doing our job. we haven’t bought a single company in the last four to five months however.

JB: Does that mean there aren’t any good companies now? Have they all been bought up?

RL: No, I’ve been here all morning at this conference meeting with people and my head is spinning. It’s a great time in this business and media. I get excited about new things. It’s much easier for us to integrate companies into Fox now than it was a year ago. When I look at acquisition targets, I look at the people, and you can see their passion. I’ve met with people who I could tell they were just buliding to sell.

JB: Barry Diller said yesterday that an entrepreneur with a great idea shouldn’t sell. Do you agree?

RL: I disagree. Not to hedge, but in some cases if you’re building a really good feature, it may make more sense to sell. If you’re building the next Google, then obviously you don’t want to sell too early.

JB: One of the previous founders of Myspace keeps suing you guys. He’s now suing you over censorship because you are blocking his sites apps from being shown on Myspace. What can you say about this?

RL: It’s Brad Greenspan, and every motion he’s filed against us has been thrown out. It’s like a boxer who fought Mike Tyson who kept getting knocked down and then getting back up. He got thrown out of the company years before we bought it, and he made $40-50 million in the sale but won’t let it go. Life is too short.

Question from an audience member: Will Myspace open up it’s data like Facebook?

RL: Email Tom Anderson. It’s a good idea and one we’re thinking about and talking about.