Good Morning Silicon Valley

Just a couple of weeks ago, the Web was abuzz over a report that, in the wake of Google’s purchase of DoubleClick and Yahoo’s acquisition of Right Media, Microsoft would make a billion-dollar offer for 24/7 Real Media in order to have its own online ad and marketing firm. Well, that turned out wrong on the buyer and wrong on the value, but right that the company would be bought and for defensive purposes.

The buyer is WPP Group, a London-based advertising and communications services conglomerate, and the price is $649 million, a lot closer to analysts’ estimates of the value than the reported Microsoft figure. Whatever Redmond’s interest might have been (and it must not have been too deep, considering its ability to outbid just about anyone), it only served to further motivate WPP, which was suddenly looking at tech companies trying to cut ad agencies out of their middleman role online, where the ultimate revenue potential is huge. “Online advertising will exceed $33 billion in 2007 or more than 8 percent of global advertising spend, based on GroupM estimates,” a WPP news release says. “This is expected to continue to grow strongly in the future, particularly as traditional media increasingly embraces and develops digital channels. The Board of WPP believes that technological capabilities and skills, combined with the Group’s understanding of client demands and media, will play an increasingly important role in providing the best solutions for our clients.”

This, of course, still leaves Microsoft on the outside as far as growing its advertising options. An acquisition of an outfit like aQuantive or Valueclick might be in the offing, or perhaps Microsoft means to build these services in house, maybe by partnering with or buying Yahoo. But you know how those rumors go.