Microsoft forms new ad unit

By Daisuke Wakabayashi

SEATTLE (Reuters) - Microsoft Corp. said on Monday it formed a new business group to work with advertisers and publishers and gain a foothold in an online advertising market expected to grow to $80 billion by 2010.

The creation of the Advertiser and Publisher Solutions group comes on completion of its $6 billion acquisition of Web advertising firm aQuantive Inc., the software maker's largest acquisition ever.

Microsoft named Brian McAndrews, the former chief executive of aQuantive, to head the new advertising group, which will be responsible for building and marketing all of the company's advertising businesses.

McAndrews will report directly to Kevin Johnson, president of Microsoft's platforms and services group. In an interview with Reuters, Johnson would not rule out future acquisitions, but said Microsoft has a complete advertising offering for now.

"My view is that we have assembled all the components we need," said Johnson, who is also responsible for Microsoft's core Windows business.

The world's largest software maker announced its plan to purchase Seattle-based aQuantive in May, a key acquisition in its strategy to an online advertising powerhouse to compete against Google Inc. and Yahoo Inc..

The aQuantive deal is the largest in a recent wave of consolidation within the Internet advertising sector as the Web's largest players try to shore up their market positions in a rapidly growing industry.

"We just have the opportunity to trade gasoline for rocket fuel in terms of how fast we can grow," McAndrews said in an interview.