Microsoft is using Advertising Week as a venue to unveil an array of services built on Windows 8, including new ad formats designed right into the operating system.
But some of the nation's biggest advertisers are using the opportunity to blast Microsoft for the latest version of Internet Explorer, which will ship with Do Not Track as a default setting, a move they believe damages the online ad ecosystem.
In an open letter to CEO Steve Ballmer, General Counsel Bradley Smith and Chief Research & Strategy Officer Craig Mundie, the world's biggest advertisers let Microsoft know that if it follows through on its promise to make do-not-track the default setting on IE, that it will "drastically damage the online experience by reducing the internet content and offerings that such advertising supports."
The letter, from the Association of National Advertisers and signed by the chief marketing officers of Procter & Gamble, Walmart, Ford, Verizon, Coca Cola, Unilever, General Electric, American Express, Kraft and 30 others, warned that the action will effectively turn off data collection across a vast swath of the public.
"Microsoft's Internet Explorer Browser currently has a 43% market share in the United States," the letter said. "By setting the Internet Explorer browser to block data collection, Microsoft's action could potentially eliminate the ability to collect web-viewing data of up to 43% of the browsers used by Americans."
Microsoft executives, many of whom have gathered in New York City for Advertising Week, privately questioned the timing. The ANA has its annual meeting later this month in Florida, but the letter seemed timed to coincide with Microsoft's splashy events during Advertising Week, which included two unveilings of Windows 8 and a redesigned MSN on Monday, plus several other events throughout the week.
Microsoft president of web services, Qi Lu, did not address Do Not Track in his presentations to advertisers and agencies today, but he did reaffirm Microsoft's commitment to ad-supported web services. "We are using Windows 8 platforms to reimagine digital-surface areas," he said. "Some of those experiences are naturally ad-funded. That is why advertising is an important business for us."
Microsoft execs, more surprised by the timing than by the content of the letter, said that its position is unchanged: Consumers should choose if they want to be tracked by advertisers, publishers, web browsers or other data collectors. On most current web browsers, that permission is assumed until a user turns it off.
Microsoft head of advertising Rik van der Kooi said that while Do Not Track will be the default setting in Internet Explorer, the new Windows 8 will prompt users during the set up process on whether they'd like to allow tracking. Mr. van der Kooi did not know how the prompt would be expressed to users, but said he believed it would explain that anonymous tracking of web surfing helps pay for free content and services through advertising.
"We think more transparency into what it really means is a good thing," Mr. van der Kooi said, in an interview. "We do think users understand that the free web is enabled by advertising."
Mr. van der Kooi conceded that it's a change of course for Microsoft, which has spent years participating in an industry consensus where web users are obliged to opt out if they'd rather not be tracked. But he said it's more in line with the future of media and web services.
"If there is anything we have changed in our philosophy, it is about putting the consumer first," he said. We make all our advertising decisions now in terms of , 'Is this an ad experience the consumer wants?' We make these decisions even when they challenge our revenue model."
At Microsoft's presentations Monday, global head of ad marketing Stephen Kim showed off a number of new ad formats built into Windows 8. Those formats were designed with the input of several creative and digital agencies, including Razorfish, whose CEO, Bob Lord, joined Mr. Kim onstage.
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