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Aug. 13, 2001, 2001

By Tobi Elkin

NEW YORK ( -- Microsoft has kicked off a $100 million program to convince the country's advertising community that online advertising works.

The software giant's MSN Internet network now boasts 250 million unique users

globally, and Richard Bray, newly installed as vice president of the U.S. MSN business, swooped into town to inaugurate the $100 million MSN Advantage Marketing effort last week.

Though it sounds more like a frequent flier program, the umbrella initiative, which includes a Premier Partner program for advertisers and an Agency Alliance program, is actually the clearest signal Microsoft Corp. has given to date that it's serious about partnering with the ad community.

Top 25 ad agencies
The program will target the top 25 ad agencies to offer a full array of digital marketing services, including next-generation online ad forms, technology platforms and metrics. MSN will take its integrated soup-to-nuts approach straight to agencies and their clients, promoting that approach as a key difference between it and rivals Yahoo!, which is struggling as a stand-alone online media company, and AOL Time Warner, which has been touting its cross-media deals.

MSN, until now, has done most deals directly with marketers.

MSN's Mr. Bray contended that rivals don't fully understand marketers' online needs, nor do they have the capacity to come up with customized marketing and sponsorships. Plus, Mr. Bray said, MSN is already gaining on its rivals. Though MSN doesn't break out ad and e-commerce revenue, the executive put that revenue last quarter on a par with Yahoo!, which posted a disappointing $182.2 million. America Online posted ad and e-commerce revenue of $706 million.

MSN plans to leverage its e-mail and messaging tools, via Hotmail and MSN Messenger, as well as Passport authentication and notification services in courting accounts.

'Mega' marketers
MSN will name one "mega" marketer per quarter as a Premier Partner; Fortune 500 companies such as Unilever, UAL Corp.'s United Airlines and broadband provider Qwest were named earlier this year. Such partners will also be among the first to have access to Microsoft's .NET Web-distributed software and consulting services.

"We want to help companies build their infrastructure," Mr. Bray said.

Agency Alliance partners will also get hand-holding, receiving regular briefings on MSN's marketing offerings, tools and research. Boston-based i-shop Digitas is the first agency in the program.

Does this mean that Microsoft wants to be a digital agency, or an e-consultant? Probably not. But it smells like IBM's Global Services move a couple of years ago -- creating a ready-made target customer base for Microsoft enterprise software and services.

Head-to-head with AOL
No matter what Microsoft's intentions, one thing is clear: The programs announced last week set the stage for a potential online ad free-for-all with AOL Time Warner, the only other deep-pocketed online media player left in the industry.

Said Forrester Research senior analyst Jim Nail last week, "I think this really does position them ahead of everyone else."

Interactive Editor Catharine P. Taylor contributed to this report.

Copyright August 2001, Crain Communications Inc.

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