Microsoft Corp.

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William H. Gates dropped out of Harvard University in 1974 to form Microsoft Corp. with partner Paul Allen. In 1981, IBM Corp. selected the company's MS-DOS software for its PCs. The following year, Microsoft formed a European subsidiary, anticipating a global market. By 1983, an estimated 40% of all personal computers were shipped with Microsoft software.

In 1983, Keye/Donna/Pearlstein, Beverly Hills, Calif., became Microsoft's first major agency. It followed a strategy of advertising in select computer and business publications, since at the time fewer than 10% of consumers were prospects for the company's software.

When the company introduced Microsoft Word in 1984, it bundled free sample disks in 100,000 copies of PC World, a promotion that cost an estimated $350,000. Microsoft also bought $1 million in ad space in The Wall Street Journal, Byte and InfoWorld to introduce Word.

In 1985, the company introduced Microsoft Windows and Excel spreadsheet software. A two-pronged campaign in 1987 for Microsoft Works, which combined word processing with spreadsheet, database and communications functions, used a national print campaign and a two-week, in-store promotion called "Work Days," supported by extensive local radio spots and newspaper ads. The "Work Days" ads used an image of a Swiss army-style knife with the headline, "Introducing the perfect business tool for a less than perfect world."

Initially, its heavy reliance on print in trade and business publications, buttressed by heavy marketing at trade shows such as Comdex, served Microsoft well. But as personal computers came to be accepted by a broader segment of consumers, the company added a mass media component.

In 1986, Microsoft made an initial public offering. In 1987, it reached sales of $345.9 million, surpassing Lotus Development Corp. as the leading independent seller of software in the U.S. That fall, Keye/Donna/Pearlstein resigned the Microsoft account, which had grown to $8 million.

Ogilvy & Mather

In 1988, Microsoft moved its account to Ogilvy & Mather, Los Angeles, which won a substantially increased ad budget of about $14 million to $20 million, reflecting both a commitment to a branding strategy and the anticipated release of a number of new products. By the end of the year, O&M debuted its first branding ad, "Making It All Make Sense," an eight-page insert promoting Microsoft's technological milestones and the full range of its products.

By the late 1980s, the company had expanded its global reach, with subsidiaries in India, Japan, South Korea and China, and was the world's leading marketer of PC software. In 1990, it launched print campaigns for two new products, Microsoft Windows 3.0 and Microsoft Office, the latter a bundled software package for business users.

The company's meteoric rise and the dominance of its MS-DOS and Windows worldwide prompted an investigation by the U.S. Federal Trade Commission beginning in 1990. The FTC deadlocked twice on whether to issue an administrative complaint against Microsoft. The Antitrust Division of the Department of Justice then reviewed the allegations against Microsoft and in 1993 began its own investigation.

By 1991, Ogilvy's yearly budget for media promotions was $19 million, with most of that spending in print. Spending in electronic media increased in recognition of the growth of personal computers in the home and, in1992, Ogilvy created the first TV campaign for Microsoft targeted at the home computer market.

The $8 million broadcast and cable network TV campaign promoted an enhanced version of Windows (3.1) and Windows-based software applications to broader audiences. Microsoft expanded in Europe as well, establishing subsidiaries in Eastern Europe and Moscow in 1992 and 1993, respectively.

In 1993, Microsoft released MS-DOS 6.0, as well as a new operating system, Windows NT, aimed at the business market. Microsoft dominated the spring Comdex computer show that year with a marketing blitz and its "Making it easier" tagline. In pursuit of the home market, the company introduced its Microsoft Home line supported by a direct-response TV campaign from Ogilvy & Mather Direct/West, Los Angeles.

In 1994, Ogilvy's Los Angeles office abruptly resigned the Microsoft account, which by then had grown to $50 million, when the agency's New York office won IBM's global account, valued at $500 million.

A two-agency strategy

That June, Microsoft assigned its account to Wieden & Kennedy, Portland, Ore., which six months later debuted "Anthem," an image campaign suggesting that Microsoft's operating system and market strength made it the ideal provider of products for consumers to use to express themselves. The campaign, tagged "Where do you want to go today?" was supported with $100 million over eight months.

Later that year, Microsoft named Anderson & Lembke to handle product advertising, with a $50 million budget, while Wieden continued to handle branding and consumer work. The following year Anderson & Lembke boosted its Microsoft billings to nearly $85 million when the account for Bob, Microsoft's computer interface, shifted from Wieden.

In August 1995, the company introduced Windows 95 with a $200 million global campaign. An additional $500 million was spent by retailers and by hardware and software allies. A 60-second TV spot featured the Rolling Stones' hit "Start Me Up," lending a hip image to both the product and the industry that had produced it.

Microsoft and the U.S. Justice Department worked out a consent decree in 1995 to settle antitrust charges against the company. However, evidence of Microsoft's practice of "preannouncing" products that were not yet ready for the market, or "vaporware," as a means of heading off competitors convinced a judge to throw out the settlement.

While at first Microsoft did not pursue the Internet, in 1995 the company launched Microsoft Network, a proprietary online service that at first dabbled in a concept of TV-style Internet "shows." Microsoft also began to develop Explorer, its Internet browser.

In addition, the company pursued an increasing number of investments and acquisitions. Whereas its early acquisitions were small software developers, alliances with such companies as NBC, Black Entertainment Television, Dreamworks SKG, MTel subsidiary SkyTel, cable giant Comcast Corp., Web TV, Tandem and Apple Computer pointed the company toward multimedia and the convergence of computers, TV and telephony. Microsoft also expanded into the role of content provider, issuing the "Encarta" CD-ROM encyclopedia and travel Web site MSN Expedia.

In fall 1996, Anderson & Lembke lost a large portion of its Microsoft business—including media buying for business software applications and the up-and-coming Windows NT operating system—to Wieden. For the Microsoft branding campaign Wieden devised a symbol—the Hand—to function as an icon.

Following the reassignment, Anderson & Lembke's principal relationship with Microsoft was its role as the company's agency of record for interactive products and for new media buying.

In 1997, the company again became the subject of antitrust hearings, this time because of plans to bundle its Explorer browser with its Windows 98 platform. That fall, Microsoft spent an estimated $10 million on a print and Internet campaign pushing Explorer 4.0. The Explorer browser was central to restaging the company around the Internet. From the inception of Explorer, Microsoft set out to unseat the dominant Netscape by offering its browser for free. Explorer was also a part of the Microsoft operating system software package, although it was not yet built into the operating system.

"Why I love my PC"

A 1998 spot from Anderson & Lembke featured Mr. Gates with a "Why I love my PC" list that included playing games with his daughter, staying in touch with his lawyers and writing to the Justice Department to explain why Internet Explorer was a good product. Other ads featured employees in a further attempt to soften the image of the company. The tagline was "The Web the way you want it."

In spring 1998, following the realignment of several of its product groups, Microsoft moved the print and online ad duties for its consumer software and hardware brands from Wieden to Anderson & Lembke. As part of the consolidation of its far-flung interactive group marketing, Microsoft also shifted its MSN account and the Microsoft Investor Web site to Anderson & Lembke.

The shop's assignment was redefined, with an increased emphasis on Internet-based advertising. Microsoft spent approximately $41 million on Internet ads in the year ended June 30, 1998, approximately 7% of all Internet advertising. Anderson & Lembke also undertook several campaigns in 1998 to soften the image of Microsoft and to counter the charges of the antitrust suit brought by the Justice Department.

That year, Microsoft also entered into a coventure to provide online news via the Microsoft network, which became MSNBC.

In 1999, for the rollout of Windows Millennium, Microsoft awarded the business to Anderson Lembke and its sibling McCann-Erickson (both owned by the Interpublic Group of Companies), which merged offices in to form McCann-Erickson/A&L Worldwide, New York and San Francisco. Microsoft's global ad budget for 1999 was estimated at $400 million, divided primarily between Wieden and Anderson & Lembke.

In November 2001, after much legal wrangling in the courts, the Justice Department recommended a settlement with Microsoft that did not force it to unbundle software, such as Explorer, from Windows, even in its new Windows XP release. Nine U.S. states, however, refused to go along with the settlement and pursued a separate trial. At about the same time, Microsoft introduced its much-anticipated X-Box gaming platform via McCann with about $100 million in spending.

In 2002, Microsoft introduced MSN 8, its newest version, via a $300 million effort by McCann that featured a butterfly as the portal's icon. The company also kicked off a $400 million global corporate brand campaign, also from McCann, with the tagline "Your potential, our passion."

Microsoft took that softer image global in 2003 in the wake of the resolution of the European Union's anti-competitive charges, with ads that portray people using Microsoft products to achieve their goals and dreams.

In 2003, Microsoft spent $1.15 billion on U.S. advertising, up 26.2% from 2002, to rank No. 25 among U.S. advertisers, according to Advertising Age.

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