Microsoft's Strategic Account Summit on May third and fourth showed the software giant is expanding their advertising universe.
The world's biggest software manufacturer clearly has its eye on something larger than the web, and readily admits that Google has provided a huge wakeup call to them in the advertising arena. And this goes beyond search, and even beyond the web. It goes to the PC (second screen) and includes advertising on the desktop and within applications.
Applications like Google Earth and Gmail have produced reaction from Microsoft with similar products-- either already released or in beta. It is apparent that at some point Microsoft will find a way to put advertising on all second and even third screen (mobile) real estate. This represents a key change. In fact, while the PC universe is only slightly larger at this point than the web universe, usage on a PC far exceeds usage on the web. And if Microsoft can monetize this through its new Live product and other initiatives, then the whole game changes.
Playing catch up
Microsoft is the leader in most categories it participates in. But not in advertising. It came late as a serious player in the web advertising marketplace (with the hire of Joanne Bradford in 2001). Recently, the company rolled out adCenter, a search and long-tail contextual engine. And at last week's conference, Microsoft made every attempt to convince 700 of the world's top advertising experts that they are making great progress in catching up. And, they did so convincingly.
Advertising, advertising, advertising…
Their pitch at the MSN Strategic Account Summit on May third and fourth ranged from the hard sell (a video of Steve Ballmer just before his appearance yelling "ADVERTISING, ADVERTISING, ADVERTISING" as his #1 priority) to the soft sell with a talk by Sir Ken Robinson on the role of creativity, which made one think that he had a future in stand-up comedy.
But one thing is clear, advertising is a priority that starts at the top with Bill Gates and Steve Ballmer, and is in the process of permeating the organization. In a move not noticed widely outside of the IT and (some) business press, Microsoft reduced their number of divisions to three last year, moving MSN and all advertising into the Windows operating group. This move, which seemed strange at the time, now seems like a logical move.
Advertising at Microsoft (you notice I did not say MSN here), is about more than search and more than just MSN or the poorly executed MSNBC. Some time in the past couple of years, someone at Microsoft realized that the "second screen" their software is on has greater penetration than the web.
The number of new initiatives, products and services behind Microsoft Live, with 20 new services since November 1, is just one good example of this. It has been the instrument for Microsoft to sprint in attempting to catch up with Google and Yahoo!. While they are not there yet, the services available are interesting, especially the application of gadgets that can be dragged and dropped to the live.com custom home page, the new live mail and live search.
With gadgets, they are making it easy for individuals or companies to create applets and put them in the public domain. My current fave is the universal converter, which converts all units of measurement.
Star power and big investments
The investment and energy being put behind this is impressive indeed. The MSN SAS featured a speaker list not commonly found at industry events: Tim Armstrong (Google), Donny Deutsch, Scott Donaton (Ad Age), Sean Finnegan (OMD), Wenda Harris Millard (Yahoo!), Sir Ken Robinson (Author/Advisor to J. Paul Getty Trust), Sir Martin Sorrell (WPP), Jim Stengel (P&G), Greg Stuart (IAB), Rishad Tobaccawala (DeNuo), David Adelman (J&J), Jay-Z, many other agency and client luminaries and, of course, a full cast from Microsoft including Joanne Bradford, Bill Gates and Steve Ballmer.
As you've probably read in the business press already, Microsoft also announced an R&D expenditure of over $1 billion in the next fiscal year, and the purchase of Massive, the ad server company for the videogame industry.
They were complimentary of Google (starting with Gates) and admitted that they have been bested so far. But Microsoft believes, and is strong in its conviction, that they are on the right track. They have invested heavily in research through XMOS (cross-media optimization study) and other initiatives. Their next set of research initiatives, which they welcome industry participation in, include:
- creative testing (how to get better creative online)
- viral marketing (I think they mean WOM. Viral is getting a negative connotation due to expectations behind it.)
- user-generated content (how do you advertise?)
- and gaming (of course with Xbox live and PC gaming and mobile opportunities)
When Donnie Deutsch had the temerity to ask Bill Gates, "what's on your iPod," Gates responded that he had all the music he needed on his mobile phone. Those wanting to participate in research on these initiatives should contact Stephen Kim at Microsoft.
Game over for search?
Some industry pundits have talked about search like it is "game over," with Google being the clear winner. But even Google is the first to say that the surface of search has only been scratched.
With the introduction of live.com and Live search, (load up live.com and try the search box, it is different from MSN search, although it uses the same underlying technology), MSN shows a glimpse of the future.
Not only does Live search have the now predictable options of searching the web for images and for news (including local search), but you can now search RSS feeds, limit your search to products, do an academic search or create your own search macros. The example they used for search macros is that you can create a liberal or conservative bias in your searches for blogs, opinion pieces, et cetera. You will also be able to download macros created by others.
Beyond the web
Microsoft is quick to point out that they are not limited to the web or even the PC screen in their ability to build vertical frequency/cross platform campaigns using the PC, MS Office (which is expected to have advertising in time), MSN, Windows Live, Mobile and Xbox 360 providing an integrated ad experience. And Bill Gates, talking about the home of the future, imagines a home where all surfaces are screens. Devices will turn on as you move around the house and tune to where you want to be through voice recognition. For example, your schedule, information on traffic from digital sources and more will be provided before you leave home; many other web services will be ubiquitous.
I've always been a fan of Microsoft and what they have the potential to do, even while sometimes hating their implementations. (Confession: I like Google too and also have a Yahoo! account.) They don't seem to be worried that they are not number one in web advertising. They seem challenged and energized by the opportunity. They will be a significant player for some time to come.