AQuantive deal sets stage for Web video battle

By Michele Gershberg

NEW YORK (Reuters) - Microsoft's (MSFT.O) $6 billion (3 billion pound) deal to buy Internet marketing firm aQuantive AQNT.O puts the company in a position to play a bigger role in the nascent online video market and piles more pressure on competitors to make acquisitions of their own.

AQuantive will likely have fetched the largest price in a wave of online ad consolidation, but as many as eight more deals could come down the pike for smaller, niche ad plays, with a range of $300 million to $500 million, industry executives and experts said on Friday.

The deal caps a frenzy of online advertising acquisitions sparked when Google (GOOG.O) agreed to buy DoubleClick for $3.1 billion last month, followed by smaller purchases by Yahoo (YHOO.O) and marketing services company WPP Group (WPP.L).

"It's really easy to look at it and say this was musical chairs. I don't think that's the case," said Dave Morgan, chairman and founder of interactive ad company Tacoda.

"Every single company is taking a step they have been looking at for years," Morgan told Reuters. "It was time to get serious because the valuations were going up a lot. It was pay now or miss the game."

At stake is a seat at the table in an advertising market dominated for decades by traditional broadcast television. Video entertainment will still be king, experts say, but they will be controlled by the Web for delivery to a set-top box, computer screen, iPod or mobile phone.

AQuantive helps advertisers serve up and track many varieties of online ads, and is home to the largest interactive agency, Avenue A/Razorfish, which also creates campaigns.

"The work aQuantive has done around things like (video-on-demand) will help complement things we are doing around MSN Video and IPTV (Internet television)," said Microsoft's president of platforms and services division, Kevin Johnson, citing one rationale for the deal.