• by Laurie Petersen , June 26, 2007

Don't look now, but the watershed M&A activity that saw upwards of $11 billion in deal activity for the first half of 2007, may not be over yet.

In what seems like ancient history, the year began with a large agency deal, the $1.3 billion acquisition of Digitas by Publicis Groupe. The critical importance of ad networks in the new world order became apparent when Google outbid Microsoft to buy DoubleClick for $3.1 billion.

Next came Yahoo's $680 million acquisition of the remaining 80 percent of Right Media that it did not already own. Those acquisitions helped fuel WPP Group's purchase of 24/7 Real Media for $649 million. Right on the heels of that deal, Microsoft stunned the community by announcing the purchase of aQuantive for $6 billion, an 85 percent premium over its stock price. Clearly, Microsoft was taking no chances of losing this one.

"As we look at how the market is evolving, we think there will only be two large-scale advertising platforms ... and we will be one of them," said Joe Doran, general manager of Microsoft's digital advertising solutions unit, on the day the deal was announced. "I think this is great news for marketers. [They] have a clear choice to get the solutions they need. We believe we will make media buying and planning easier, cheaper and more efficient."

Don't tell that to the smaller guys. AOL also bolstered its ad network by adding to its existing Advertising.com platform the German ad network ADTECH AG. Another interesting harbinger of future activity in the vertical segment was Hachette USA's purchase of Jumpstart Automotive Media for $110 million. That deal gave the owner of Car and Driver the leading auto specialist ad network.

In another deal, Google on June 1 confirmed it's buying Feedburner, with an ad network servicing hundreds of thousands of RSS feeds. The deal gives Google the dominant player in the rapidly growing world of distributed content.

The experts have stopped trying to rationalize the prices being paid. "It's a wacky world," is how Jordan Rohan puts it. He's the managing director and Internet analyst at RBC Capital Markets.

RBC advised on another June deal, the management-led buyout of Innovation Interactive from Livedoor Japan. Innovation has an ad network, as well as 360i and SearchIgnite. Its partner in the buyout is abs Capital, a private equity firm.

Dave Morgan, chairman of the independent behavioral ad network Tacoda, sees the unprecedented deal action as a extension of the market's shift: "Since we are unlikely to have the same kind of clear boundaries online that we have had in traditional media, data ownership will define how companies work together," Morgan says. "Companies will stake their positions by what consumer data they collect, who they share it with and who they don't, and how they monetize it."