Microsoft Steps Up to Online-Ad Plate

Giant Unveils AdCenter at Summit Attended by 700 From Ad-world Elite

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REDMOND, Wash. ( -- Microsoft to advertisers: We're ready to play ball. That message was loud and clear even before the software giant rented out Seattle's Safeco Field.
Microsoft CEO Steve Ballmer has made clear that Microsoft now views itself as an Internet advertising company as well as a software giant.
Microsoft CEO Steve Ballmer has made clear that Microsoft now views itself as an Internet advertising company as well as a software giant.

More than 700 of Microsoft's top advertisers made the trek to Redmond for Microsoft's annual Strategic Account Summit last week, which included closing-night batting practice at the home of the Seattle Mariners. The invitation-only event has grown so popular among marketers and agencies that a ticket placed on eBay by Microsoft's marketing team went for $700. Even the weather turned out-the clear, sunny sky giving way to stunning views of Mount Rainier.

If there was any doubt how important advertising has become within Microsoft-and how critical the launch of its AdCenter platform to serve ads to the company's search, software, gaming and TV products -- it was that both Microsoft Chairman Bill Gates and CEO Steve Ballmer spent time at the May 2-4 summit. Group M chair Irwin Gotlieb, IPG Media topper Mark Rosenthal, Universal McCann chief Nick Brien and Starcom CEO John Muszynski all showed up to see panels and speakers that included a group as diverse as WPP Group's Martin Sorrell, hip-hop-artist-cum-businessman Jay-Z and adman-turned-talk-show-host Donny Deutsch.

"This year the online-advertising business will surpass print and I think print lies about their numbers," charged Joanne Bradford, corporate VP-global sales and marketing at Microsoft, as she opened the summit May 3.

Microsoft has much riding on AdCenter, its bold move to get back into the online-ad game after lagging behind Google and Yahoo. AdCenter's biggest immediate impact will be in the lucrative search space, where MSN's 11% share lags Google and Yahoo's 49% and 22.5%, respectively.

Mr. Ballmer was his usual effusive self, insisting that Microsoft wasn't late but on the early wave of a next-generation technology change. "Literally 10 years from now everything you read you will read on a screen," he said, amid other Ballmerisms.

He noted that Microsoft had invested heavily in online research and development to the tune of $2.1 billion. "We surprised some in the financial community with that," he said.

Mr. Gates, as usual, was Mr. Ballmer's perfect measured foil. He was interviewed by Mr. Deutsch in front of attendees for his CNBC TV show "The Big Idea" and revealed a few rare personal anecdotes: He plays bridge online with a group of friends every morning and will supervise his 11-year-old daughter's Internet behavior until she's "about 14"-but he's not yet worried since right now she primarily just wants to buy pets she finds online.

Addressing the threat of Google, he noted "they've done a great job on their search and what they've done with advertising. We will keep them honest in the sense of being able to be better at a number of those things and bring a new angle to it. ... We're underestimated, that doesn't happen that often."

The news that fell most flat was Microsoft Entertainment President Robbie Bach's announcement that Microsoft was acquiring in-game advertising company Massive (See P. 6). Other rumors plaguing the conference included one from last week's Wall Street Journal-that one camp within Microsoft sees a partnership with Yahoo as its entry to the mass online search share.

While no one from Microsoft addressed the issue directly, Ms. Bradford, in a panel that also included Google's Tim Armstrong and Yahoo's Wenda Harris Millard, said, "This whole Google-Microsoft-Yahoo thing is the Nick and Jessica of the business press."
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