The future of Razorfish, the interactive agency Microsoft acquired back in 2007, has been the hot topic of discussion for the last week. And finally the rumors can be laid to rest.

On Sunday, French advertising powerhouse, Publicis Groupe, acquired the agency for $530 million spread across cash and stocks. That’s equivalent to about 1.2 times the agency’s annual revenue which last year sat at approx $400 million.

Microsoft auctioned off Razorfish, with bids coming from some of the world’s biggest agencies including WPP, the world’s largest agency and Dentsu, Japan’s biggest advertising house.

Maurice Levy, chief executive of Publicis Groupe, reinforced that the acquisition was:

another step forward in realizing our strategic vision of building a world leader in digital communications, a critically important space for our clients

Microsoft’s benefits from the agreement extend beyond the initial payout, with Publicis required to purchase display and search advertising on Microsoft sites including MSN.com and Bing.

The sale of Razorfish could be a sign that Microsoft is tightening up its strategic direction and display/interactive advertising aren’t a key part of that vision. Given the effort and money invested in the new Bing search engine and associated marketing campaign – it makes sense.

The future of display has been debated in great length as Search has continued to grow and steal share of marketing budgets. Whilst it’s unlikely interactive/display advertising will die soon, it’s prospects seem less optimistic than its search counterpart.

I wonder what the future holds for DoubleClick – Google’s display/interactive arm. Will they follow suits, or will Google be able to successfully integrate an interactive agency into its Search Empire.

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