The Game Changer: The (Digital) Departed

There has been an interesting trend emerging in the past few months, as the digital ad agency space has seen their largest, publicly traded players dropping quicker than Boston’s finest and Jack Nicholson’s crew in the closing scenes of The Departed (one of the best films ever made). These web-specialized ad agencies have become a hot commodity, as many large companies and traditional agencies are finding it easier to put up a few benjamins to acquire a digital marketing division than to develop one from scratch.

The latest “casualty” was aQuantive, acquired by Microsoft to the tune of $6 billion….cash, that’s right, cash. Through ownership of their digital ad creators, aQuantive and their subsidiary, Avenue A/Razorfish, Microsoft hopes to boost the quality and volume of banner and display advertising. The main objective of the move was to compete with both Yahoo and Google, who acquired their own ad agencies, Right Media and Double Click, respecitively, in an attempt to own their digital marketing efforts. The deal will help boost Microsoft’s banner and other display advertising’s quality and volume though aQuantive and their subsidiary, Avenue A/ Razorfish. The move was ultimately made to stay competitive with Google and Yahoo, who acquired DoubleClick and Right Media, respectively, in an attempt to build-out their own digital efforts.

The bigger story here is the price tag. The $6 billion Microsoft paid was 85% over the company’s value. And they are not the only ones who are over paying. Just days earlier, London based WWP Group, the world's second-largest agency conglomerate, purchased 24/7 Real Media Inc. for $649 million, paying 30% over value.

The digital agency is changing the game by commanding exorbitant premiums for their takeovers; thus validating their existence. Though Al Gore’s greatest creation has been around for a while, marketers are finally figuring out how to effectively use the space, promoting consumer-brand interaction like never before, and with companies and agencies scooping up web specialty firms left and right, naming "CDO"s, and continuing to expand their operations, this is a trend that may not slow down anytime soon.

Now, if someone could just figure out what was in the package at the end of the movie…