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The growing world of online advertising is getting smaller day by day. Last Friday, Microsoft announced it would acquire aQuantive, a big player in the realm of server-delivered display ads. Just the day before, WPP Group, the world’s second-largest advertising and marketing conglomerate, said it had snapped up 24/7 Real Media, a pioneering agency in the digital marketing space. The moves follow similar tactics executed by Google and Yahoo! over the last few weeks.

Microsoft’s friendly takeover of aQuantive is just the latest blockbuster in a cycle of consolidation reshaping the online sector of the advertising industry, where growth is accelerating as clients are switching from expensive print and on-air campaigns to relatively modest and more effective efforts over the Internet. That reality has driven the value of the online agencies to new heights, and media analysts are concluding that the major ‘Net technology operators are pouncing now so as not to be left out when this round of “musical chairs” hears the music stop.

The aQuantive deal will cost Microsoft about US $6 billion, according to leaders in Redmond. It will give the world’s biggest software firm an Internet-wide advertising platform, as well as a set of tools and services for environments such as cross-media planning, video-on-demand, and online TV. Microsoft CEO Steve Ballmer said of the acquisition:

“The advertising industry is evolving and growing at an incredible pace, moving increasingly toward online and IP-served platforms, which dramatically increases the importance of software for this industry…. Microsoft is intensely committed to creating a thriving advertising business and to partnering closely with all key constituencies in this industry to help maximize the digital advertising opportunity for all.”

The acquisition of 24/7 Real Media comes with a price-tag of $649 million for WPP. The advertising and marketing giant said the move will strengthen WPP’s status in the rapidly growing digital marketing industry, enhancing its position in search marketing and digital media, as well as adding strong technology skills. WPP CEO Sir Martin Sorrell said: “Our clients and therefore our industry are becoming more media and technology driven. 24/7 Real Media significantly enhances our capabilities, technological resources and talent, as well as adding to our geographic coverage and our measurable skills.”

Other recent deals in the digital ad sector include:

13 April: Google offers to purchase DoubleClick, a leading ad-management technology agency specializing in banner ads for Web pages. Reported price: $3.1 billion.

30 April: Yahoo! agrees to buy the 80 percent of Right Media it does not already own. Right Media competes with DoubleClick in Web display ads and client software. Reported price: $680 million.

And the bidding is not over. “There is clearly a race going on,” AOL CEO Randy Falco said at the recent Reuters Global Technology, Media, and Telecoms Summit in New York. “This business is more and more about ad serving technologies. [We] have to be in every space we could possibly be in.”

It’s a sign of the times. When it comes to advertising in the digital age, we’ve crossed the Rubicon.

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