Microsoft reorganization centralizes marketing

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Microsoft Corp., Redmond, Wash., reorganized its sprawling marketing organization in an effort to streamline major brand initiatives and lend overall consistency to its advertising. The software giant's move, the culmination of an intensive six-month process, centralizes responsibility for all marketing initiatives and budgetary control under Mich Mathews, named VP-marketing. The consolidation coincides with a companywide restructuring as Microsoft prepares for a new fiscal year, beginning June 1. The reorganization comes at a pivotal time for Microsoft, as potential remedies are under consideration in the federal antitrust ruling against it. The company's behavior and corporate image are more under scrutiny than ever as the case enters a new phase.

Ms. Mathews will oversee the work of several major organizations at Microsoft--the newly formed Solutions Marketing Group, advertising, public relations, events, research and customer relationship marketing. Ms. Mathews previously was VP-corporate public relations. Andy Lees, a marketing executive from Microsoft's U.K. subsidiary, one of the company's strongest from a marketing standpoint, will relocate to become VP of the Solutions Marketing Group.

Executives believe the consolidation will enable Microsoft to execute advertising and brand decisions with McCann-Erickson/A&L, New York and San Francisco, its agency partner, in a more organized and deliberate fashion. The previous marketing organization was highly decentralized and involved far too many people, executives say. A core group of 10 people will now sit at the marketing helm as Microsoft moves to embrace solutions-oriented messaging around key initiatives such as Next Generation Windows Services.

The reorganization is expected to establish a central point of control and improve message clarity. It also will help drive a higher degree of integration across all marketing disciplines such as PR and events.

"In a way there will be a lot fewer moving parts," said Mike Delman, general manager-advertising and events. "Microsoft traditionally has been very decentralized, and we had a lot of product groups with hundreds and hundreds of products and some big ad budgets. There was an incredible array of people involved, there was an incredible array of messages to consumers and an incredible amount of contact points with the agency." He added: "One of our goals was to create a better relationship with McCann as a long-term partner.

Microsoft's U.S. ad account is estimated at $350 million. Recently, another $100 million was allocated to create a brand and marketing around the X-Box, the company's forthcoming videogame console. McCann-Erickson Worldwide, New York, was recently awarded creative duties.

Mr. Delman said a modest 6% to 10% increase in marketing expenditures is expected for the next fiscal year.

The marketing shift means Ms. Mathews reports to Jeff Rakes, exec VP-sales and marketing, and a longtime Microsoft employee. Mr. Rakes reports to President-CEO Steve Ballmer. Chief Operating Officer Bob Herbold, who previously had responsibility for corporate advertising and research, will cede those duties to Ms. Mathews. Mr. Herbold's day-to-day responsibilities have increased, in large part, due to the ongoing antitrust matter. "Bob controls all the operations [of the company] and is also a very central spokesperson for this company on a lot of fronts, whether they be legal issues or industry issues or operational issues," Mr. Delman said.

Copyright April 2000, Crain Communications Inc.

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