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Sunday, November 2, 2008

Advertising Downturn - Microsoft Razorfish Layoffs


Razorfish, which Microsoft acquired as part of last year's $6 Billion aQuantive acquisition, is laying off 40 of its 2,000 staff members.  The layoffs are all from their New York office, which has lost quite a few clients in the recent economic downturn. 

At the same time, Razorfish is looking to expand its presence in Europe, and is buying Wysiwyg, one of Spain's largest online ad agencies. 

Add to these two the rumors that Microsoft is looking to sell off Razorfish (which used to be Avenue A/ Razorfish before a recent rebranding), and you have an enigma wrapped in a conundrum. 

The rumors around Razorfish's potential sale have quite a bit of meat to them.  Add to them the following facts, that bolster the rumors:

a) Microsoft was really looking to buy aQuantive, in response to Google snapping up DoubleClick.  Razorfish came as part of the package, and didn't really fit with Microsoft's overall strategy. 

b) Microsoft puts almost $250 Million a year into digital advertising.  You read that right!  And they use other agencies, mainly (as far as I know) Universal McCann for a lot of their digital media plans.  Now, if Razorfish was strategically a fit, wouldn't this be different?

c) Razorfish represents a broad spectrum of clients.  But they aren't really selling them on advertising on Microsoft pages front and center.  That stands to reason - without objectivity, Razorfish would not be able to keep their clients for very long.  But then how does it serve Microsoft to keep them around?


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