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REVAMPED MSN GETS $50 MIL IN ADS;MICROSOFT ALSO WILL LINK WEB SERVICE TO ITS OTHER PRODUCTS

By Published on .

Microsoft Corp. will pump $100 million through June 1997 into marketing the revamped Microsoft Network, as it throttles ahead to build a $1 billion-plus media content business by 2000.

Roughly half the budget will go into an ad campaign, starting Oct. 16 with outdoor teaser ads; TV spots break Nov. 8, and print ads will follow. The rest of the budget will go into direct marketing, promotions and other programs.

ADS IN 22 KEY MARKETS

TV and outdoor will run in 22 key markets, and Microsoft executives freely admit MSN will be outspent by rivals-chiefly America Online. But MSN will benefit from cross-promotion with other Microsoft products and from being part of the domineering marketer's brand.

Wieden & Kennedy, Portland, Ore., and Grey Direct, Seattle, are handling.

Benefiting heavily from being bundled with the Windows 95 operating system, MSN has grown to 1.6 million members-and (a distant) No. 3 behind AOL and CompuServe-since launching as a proprietary service in August 1995. But it will relaunch as a Web-based service in November with a price of $19.95 a month for unlimited access.

MSN in a way still is proprietary: The subscription service only works with Windows 95.

MSN will be the umbrella for various online media, including MSNBC, a Web/cable venture with NBC; Slate, the political and cultural Webzine; Expedia, a new travel service; MSN Plaza, a fledgling shopping area; and the code-named Cityscape local entertainment site.

Cityscape is expected to be up in 10 to 15 U.S. cities and several outside the country by the end of 1997, said John Neilson, VP-information products, interactive media division.

INTENDS TO BE `A LEADER'

Patty Stonesifer, senior VP-interactive media division, said Microsoft intends to be "a leader" in four Web categories: news; entertainment; services, such as shopping and investing; and local information.

Hollywood is at the heart of MSN. Consumers can click on six "channels," each featuring "shows," or audio/video/print content, targeted to a demographic, such as women or kids. Content comes both from Microsoft and partners.

Microsoft continues to work on alliances, often with rivals. To reach consumers already on a Web service, Microsoft is striking deals with MCI and other access providers to MSN's services for $6.95 a month.

PROFITS ARE YEARS OFF

Chairman Bill Gates said Microsoft is spending "many hundreds of millions of dollars" a year to develop content. He and other executives cautioned that profits from the company's online ventures are at least three years off.

Pete Higgins, group VP-applications & content, said the online industry's total revenues likely will grow from $4 billion this year to $13 billion to $15 billion in 2000-with it "reasonable" to think Microsoft will snare a 10% share.

Mr. Higgins estimated online advertising will grow from $200 million this year to $2.9 billion in 2000. He said advertising and transaction fees could account for 20%-to-30% of Microsoft's online revenues within three years.

MICROSOFT'S ASPIRATION

Microsoft, already the biggest Internet ad buyer, has "an aspiration" to be the biggest Internet advertising seller, he added.

Microsoft over the past year sold "a few" million dollars in online ads, said Bill Miller, MSN's general manager of advertising.

MSN will go from one sales rep in July to about 10 by year's end. Kevin Doerr, a veteran of Web tracking service iPro, starts in December as MSN national sales manager.

MSN claims about 50 advertisers, including AT&T Corp., Ford Motor Co. and Fidelity Investments.

Contributing: Alice Z. Cuneo.

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