MICROSOFT FINALLY AXES WIEDEN, PUTS BRAND AT MCCANN: MOVE COMES AFTER REASSURANCES THAT PORTLAND SHOP WOULD KEEP ACCOUNT

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After months of public denials that it would fire Wieden & Kennedy, Microsoft Corp. last week pulled the trigger.

Microsoft yanked its estimated $100 million brand ad account from the Portland, Ore., agency, consolidating its entire estimated $230 million in U.S. advertising at McCann-Erickson Worldwide.

The shift represents a remarkable victory for McCann, which observers say bought Anderson & Lembke, San Francisco, four years ago with the goal to snare the big prize. At the time, Anderson was Microsoft's No. 2 agency, working in the shadow of Wieden and its high-profile TV brand advertising.

SHIFTING ALLEGIANCES

Since hiring Wieden and Anderson in 1994, Microsoft periodically shifted business back and forth, leaving the impression that one agency was the favorite at any given time-even as Microsoft always stood by both agencies.

The brand work is expected to be handled by McCann-Erickson/

A&L, San Francisco.

Microsoft Exec VP-Chief Operating Officer Bob Herbold said it would "make most sense" to put the brand work in the Bay area office, but the company is leaving the decision up to McCann.

Even after the deed was done, Mr. Herbold said Wieden's recent work is "probably some of the strongest" the agency has produced, with research on how key targets perceive brand attributes scoring "near all-time highs."

Anderson snared more than half of Microsoft's U.S. billings last year. And last month, Microsoft moved its final product assignment-the signature Windows-to a team of McCann and Anderson, prompting this month's merger of the San Francisco offices of the two shops.

Mr. Herbold said the decision to consolidate first came under discussion just two to three weeks ago, when Microsoft-gearing up to launch Windows 2000-decided to move TV advertising from brand promotion to a mix of brand, product and solutions messages in the fiscal year beginning July 1, when the global budget is expected to rise about 6% to $425 million.

The agency change follows a corporate reorganization by President Steve Ballmer, who at times has questioned why Microsoft spends so much money touting brand.

With a new ad strategy, Mr. Herbold said, Microsoft concluded it would be more efficient and productive to consolidate.

He said Microsoft wants McCann/A&L to create a "common template" and tone for product and brand work. The agency will execute ads playing off Wieden's recent creative while it creates a new look.

OPEN TO NEW TAGLINE

Microsoft is open to replacing Wieden's "Where do you want to go today?" tagline, Mr. Herbold said.

Tech insiders long have criticized Microsoft advertising as lackluster. Rumors persisted over the past year that Wieden was in trouble-with continual denials at Microsoft.

"We're very happy with what Wieden & Kennedy has done for us," said Director of Advertising Eric Koivisto on May 13. "The brand and image stuff, it ain't going anywhere," he added, saying the Wieden relationship "absolutely" has never been stronger.

Amid rumors that McCann was interviewing candidates to work on the brand assignment, Mr. Herbold on May 24 again denied McCann was getting the brand job.

In announcing the May 27 hiring of McCann/A&L for Windows, Rob Schoeben, director of integrated marketing communications for the Business & Enterprise division, said the move would "absolutely not" affect Wieden's role as brand agency.

Mr. Herbold said McCann executives did not pitch the brand account and did not have a clue they were getting the assignment until he called Chairman John J. Dooner Jr. on June 15.

"They were as surprised as I hope you were," Mr. Herbold said.

FOLLOWS HIGH-TECH TREND

Microsoft is following the trend set by IBM Corp., Intel Corp. and Compaq Computer Corp.: assigning the world's biggest tech ad accounts without review.

Once Microsoft decided to consolidate, Mr. Herbold said the company felt McCann could do the job and saw no reason for the often "ritualistic process" of review.

Unlike most other tech giants, Microsoft consolidated only U.S. work-for now. Non-U.S. advertising-primarily adaptations of domestic ads-is split among various shops, including McCann, Euro RSCG Worldwide and D'Arcy Masius Benton & Bowles.

NOT AN ISSUE RIGHT NOW

"Whether or not we take this any farther will be based on our learning," Mr. Herbold said. "This is not an issue right now, not even being considered."

In a management change Mr. Herbold said was unrelated to the agency shift, Microsoft combined corporate advertising and public relations. Mich Mathews moved into the new post of VP-corporate communications from VP-public relations, adding responsibility for corporate advertising.

"Mich will be responsible for ensuring that the company's vision and goals are crisply and clearly communicated in our PR and advertising," Mr. Herbold said.

'MORE CONSISTENT VOICE'

"A big part of our strategy to achieve this is through a well-integrated and coordinated TV campaign that reflects the communication needs of the entire company. As a result, our PR and advertising communications will become more closely aligned, and therefore a stronger and more concise Microsoft voice will be delivered to the outside world," he said.

The corporate communications shift signals a strong vote of confidence in Ms. Mathews following a year in which Microsoft's image has been under attack during its antitrust trial in Washington. Outsiders have at times criticized Microsoft's PR efforts during the trial as overbearing and ineffective.

"Mich has done a good job in PR and deserves more responsibility," Mr. Herbold said.

Microsoft is disbanding its corporate marketing group, with VP-Corporate Marketing Jon Reingold taking a special assignment reporting to Mr. Herbold. Mr.

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