MICROSOFT REBOOTS MARKETING;SOFTWARE GIANT TO REVIEW $25 MIL DIRECT ACCOUNT, BEGINS REALIGNING AD MANAGEMENT

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Microsoft Corp. is preparing to review a $25 million direct-marketing assignment, one of a flurry of changes as the software giant restages itself for the Internet.

Microsoft also is streamlining advertising management, exploring long-term sponsorships, starting to phase out its Microsoft Home brand and putting new emphasis on market research-all matters that bear the marketing discipline of Exec VP Bob Herbold.

FIRST '96 TV CAMPAIGN

Meanwhile, Microsoft March 9 launches its first TV campaign of the year with four spots via Wieden & Kennedy, Portland, Ore., that extend a brand-and-product effort from last fall.

"It's brand advertising, but our brand is proved by our products," said Greg Perlot, director of advertising and market research.

On the direct-marketing front, Anderson & Lembke is surrendering its business-to-business direct assignment. But Microsoft has named the San Francisco shop agency of record for new-media buying. Anderson & Lembke also continues to handle $75 million in business-to-business and consumer product work for the software company.

"We want them to concentrate on advertising, particularly business-to-business advertising, which is their core competency," Mr. Perlot said.

NEW-MEDIA CREATIVE

In its fiscal year beginning in July, Microsoft will decide whether to make a formal assignment of new-media creative, currently parceled out on a project basis, Mr. Perlot said.

"Ultimately, efficiency is going to cause us to standardize in some way," he said, as will the desire for a unified image.

John Zagula, group marketing manager in the Desktop Applications Division, summarily dismissed rumors of troubles with Anderson & Lembke.

"We have a strong relationship," he said, pointing to the new-media assignment.

Hans Ullmark, Anderson & Lembke president-CEO, said last year the agency was laboring to keep up with growth on the Microsoft account. After receiving a "wake-up call" from a Microsoft division, he added, the agency recently installed a new management team, including Jeremy Clarke as executive creative director and Matt Seiler as director of client services. Former VP-Managing Director Irina Heirakuji left.

Even without the direct assignment, Anderson & Lembke expects its Microsoft billings to remain at $100 million because Microsoft's efforts are growing.

Still, the agency is eliminating 10 jobs and reassigning 15 others after ending its direct relationship.

Anderson & Lembke picked up the direct work when it landed Microsoft's U.S. product account in 1994; Grey Direct won the consumer direct assignment.

Agencies have had good reason to watch Microsoft. Mr. Herbold, the former ad chief at Procter & Gamble Co., inherited the two agencies when he arrived in 1994. But he has made no agency changes and, in fact, has made glowing comments about Wieden's high-profile TV work.

DEMONSTRATED AD IMPACT

"We have done some terrific, very sophisticated research on our TV ads," he said. "It really demonstrated their impact."

Mr. Herbold's marketing input is becoming more apparent. In a reorganization, General Manager-Corporate Marketing Liz King moves to a key post in a new education division, so Mr. Perlot reports directly to Mr. Herbold.

"We think we can handle it more crisply this way by eliminating a layer," Mr. Herbold said.

Mr. Perlot picks up oversight of market research, a key interest for Mr. Herbold, who once ran market research at P&G.

Ben Evans, director of creative services, now reports to Mr. Herbold as well.

Also, VP-Strategic Relations Jon Lazarus is retiring. Mr. Lazarus has been a key behind-the-scenes player in shaping Microsoft's image, but has ruffled feathers inside the company.

In another sign of streamlined marketing, Microsoft is preparing to phase out "Microsoft Home," a subbrand introduced in '93.

The mastermind behind Microsoft consumer products, Senior VP Patty Stonesifer, also is moving, taking a new post as manager of a new Interactive Media Division, where she will oversee consumer software, Microsoft Network, cable and online ventures with NBC, an investment in DreamWorks Interactive and journalist Michael Kinsley's new online magazine.

"She's a little Ted Turner," marveled one insider.

Another executive, Marty Levin, has taken the division's new job as director of interactive marketing, responsibile for bringing advertising into MSN and potentially other Microsoft products.

In the division, "we will start thinking more like a media company than a software company," said Mr. Levin, who had been overseeing advertising for MSN.

MSN WOOING NFL

In the sports arena, MSN is pursuing a major sponsorship tie-in with the National Football League. Mr. Herbold met with Wieden executives March 1 to discuss the merits of longer-term promotions, such as Olympics sponsorships.

Alice Z. Cuneo and Jeff Jensen contributed to this story.

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