MICROSOFT EASES AD GROWTH BUT UPS INTERACTIVE BUDGET: GLOBAL SPENDING EXPECTED NEAR $400 MIL MARK

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Microsoft Corp. is slowing down growth in ad spending but raising its bet on interactive marketing.

Microsoft's global ad spending is expected to increase about 13% to 14% to just shy of $400 million in fiscal 1999, which began July 1. The U.S. is expected to account for 55% of spending, or $220 million. The overall spending growth is less than the estimated 20% boost in fiscal '98.

13% FOR INTERACTIVE ADS

The software giant is expected to allocate some 11% to 13% of its budget to interactive ads, up from 10% last year. That should boost Microsoft's interactive ad budget to as high as $52 million, securing Microsoft's position ahead of IBM Corp. as the most advertised brand on the World Wide Web.

Exec VP-Chief Operating Officer Bob Herbold said the Web is an efficient medium for Microsoft to reach its tech-savvy target.

"Our very best customers are heavy online users," Mr. Herbold said.

Microsoft is continuing a strategy begun several years ago of keeping growth in ad and marketing spending below revenue growth, part of a corporate mandate to control costs to help protect profit margins. Mr. Herbold contended Microsoft is getting more efficient in advertising and so is able to hold down spending increases.

Microsoft's estimated revenue this fiscal year is likely to grow about 15%, down from the 28% growth last year, when revenue soared to $14.5 billion. Microsoft said growth will slow because of such issues as maturing markets, slower PC growth and the delay of its critical new Windows NT 5.0 operating system.

PRINT STILL RULES

For fiscal '99, print will remain Microsoft's biggest medium, with estimated spending getting a single-digit percentage increase to as high as $174 million, up from $160 million last year. Broadcast should get a similar gain, to about $130 million, from an estimated $120 million.

In addition to interactive spending, the rest of the global ad budget will be divided among other media, including out-of-home.

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