[Posted by Shar VanBoskirk]

Breaking news in the interactive marketing space…Microsoft announced today a $44.6 billion bid to acquire long-time online rival Yahoo!.  The bid represents a $31 per share price which is a 62% premium over current trading value.  You may recall an eerily similar announcement from last summer when Microsoft first launched efforts to woo Yahoo! into a deal.

In its press release Microsoft indicated its focus for the combined entity would “create a more efficient company with synergies in four areas: scale economics driven by audience critical mass and increased value for advertisers; combined engineering talent to accelerate innovation; operational efficiencies through elimination of redundant cost; and the ability to innovate in emerging user experiences such as video and mobile.”

I whole-heartedly agree with the benefits Microsoft believes would result from a marriage with Yahoo!, but my bet is that Yahoo! is no more interested in selling to Microsoft now than they were a year ago.  This time around, however, the deal may be one they just can’t refuse. 

Here’s what I think interactive marketers should consider about this possible acquisition. A combined MS/Yahoo! would mean:

*Deeper customer data.  For an advertiser looking to laser-target ads, a behavioral history of users aggregated across all of Microsoft and Yahoo!’s media properties would be invaluable. 

*Easier ad management.  We’ve long talked about the advertiser challenge of having to work with multiple agencies, media firms, ad networks, technology companies.  While smart marketers shouldn’t give over to only buying ads with the MS/Yahoo! conglomerate, having a large media partner that can singularly manage buys across channels will greatly simplify the mechanics of integrated marketing.

*Proven staying potential of online ads.  Forrester expects that interactive marketing budgets will stay strong despite growing concern about an economic recession.  This acquisition shows that Microsoft is banking heavily on the same assertion.  We believe that the combined Microsoft/Yahoo! should happily take second place to Google in the search business, and focus all of its energy on trouncing them in the brand advertising (with an emphasis on display ads and online video) space. However, my bet is that neither Yahoo nor MSN will relinquish their search emphasis so readily. 

*A new definition of media.  My colleague Charlene Li has written before about the transformation media companies are undertaking due to the rise of social computing.  As syndication replaces aggregation, a media company becomes one which assembles an audience, not necessarily a firm which creates content (think Facebook v. CNN).  In light of this acquisition, I’d add one more dimension to this observation.  With Yahoo gone, the two remaining online media powerhouses:  Google and Microsoft are both technology companies.  These are firms who specialize in creating tools and innovations to facilitate the user experience of the Web and marketer access to customer data.  I think this acquisition signals for both marketers and media firms that the trend of Left Brain Marketing – a data-driven approach to marketing – is irrevocably changing who we call a media firm.  Tomorrow’s media companies are technology innovators who can connect audiences with marketing messages, not content creators. See what Charlene has to say about what this possible deal will bring to other online media firms.