Online advertising sales and hosting company DoubleClick is up for sale, and Microsoft could be a buyer, according to a report Wednesday.

Private equity investors Hellman and Friedman of San Francisco and JMI Equity of San Diego bought DoubleClick for $1.1 billion in 2005, and have since transformed the company, selling off some activities to focus on the core business of advertising.

Now Hellman & Friedman has put a price tag of around $2 billion on its stake in the company, and has retained investment bank Morgan Stanley to help it find a buyer, the Wall Street Journal reported, citing people familiar with the matter.

Microsoft is among the companies already actively discussing a possible deal, the Journal said.

DoubleClick staff in London had not heard anything about the negotiations, company spokeswoman Doireann Gillan said Wednesday morning. Microsoft representatives in Europe refused to comment on "rumor and speculation".

As online advertising volumes increase, portal companies and other large Web properties must decide whether it is best to sell and serve ads using their own platform, or whether to outsource these activities to another company, said Nate Elliott, senior analyst at JupiterResearch, a division of JupiterKagan.

Search portals such as Yahoo and Google have chosen to build systems to sell and serve advertising. Other sites turn to companies such as DoubleClick to handle the technical side for them.

Microsoft set up its own platform in 2005, selling online advertising on its properties in France, and went on to launch the service in the U.S. last May. The platform, called adCenter, serves up targeted, pay-per-click ads on Web properties such as Windows Live Search. Microsoft has pledged to invest $2.4 billion in R&D this year, nearly half of it in its Internet business unit, of which Live and adCenter are a part.

If Microsoft were to expand its business by buying DoubleClick, this would not be its first acquisition in the field. Last May, it bought Massive, a specialist in placing advertising within video games, and also DeepMatrix, a Web analytics company, intending to incorporate their activities into its adCenter platform.

Selling advertising "is clearly core to what Microsoft does online. For MSN and related properties, advertising is the key revenue stream, and DoubleClick would be a good fit," said JupiterResearch's Elliott. However, Microsoft has also put a great deal of effort into developing its own system, and so could go it alone, he said.

The IDG News Service is a Network World affiliate.