The Third and Fourth Screens

Microsoft’s strategy for its emerging advertising business is interesting.

Given that the first screen (TV) is not one they can dominate and the second screen (Internet) is one that they missed the opportunity to dominate, they are working hard at dominance on the third and fourth screens, that being cell phones and games.

Microsoft has already purchased Massive which many believe is the leading provider of in game advertising solutions. If Microsoft manages that acquisition correctly, it can be a bigger player advertising in games than its Internet competitors Yahoo! and Google.

And the Wall Street Journal reported on friday that Microsoft is close to sealing a deal to acquire Third Screen Media which is one of the leading providers of advertising on cell phones.

Cell phone and in game advertising are both miniscule compared to internet and television but they are interactive, measurable, and may represent as much or more consumer face time as the internet and TV does already.

So these seem like smart moves to me.

A lot will hinge on the ability of Microsoft to manage these acqusitions.  The problem with buying companies is that the people eventually leave. AOL made a very smart acquisition of advertising.com several years ago that has made them a significant player in the online ad network business, but now that they key people are leaving advertsing.com, there is a big question about whether AOL will be able to maintain the momentum of advertising.com.

The same question lingers over these acquisitions by Microsoft. But I applaud them for taking the initiative and wish them luck with them.