Word of the preparations comes six months after Microsoft's Mark
Penn and Tami Reller took over a new centralized marketing group,
and as the company continues to seek a CEO to succeed Steve
Ballmer.
While cost-containment efforts are not solely driving the
planned pitch, the procurement group will likely be influential in
the process given the company's sizeable marketing expenses.
Microsoft, which spent $1.3 billion on U.S. advertising and
promotions, is ranked 33rd on the Ad Age DataCenter's list of top
spenders in 2012. The company spent $342 million on network TV --
more than any other platform and 50% more than it spent on TV the
previous year. Media spending results aren't in for 2013 as a whole
yet, but the first nine months of last year saw Microsoft spend
$547.7 million on domestic measured media, according to Kantar
Media.
The likely players in the review are WPP and Publicis Groupe, which already support
the bulk of Microsoft's business. Interpublic Group also supports
various elements of Microsoft marketing. Omnicom is likely to steer
clear of the pitch due to its close ties with Apple, a major
competitor. But pretty soon Omnicom and Publicis will be part of
the same family, if their merger is approved around the world, so
the powers that be will have to work around the idea of conflict
during the pitch.
Incumbents
Publicis Groupe
Publicis' Razorfish has substantially grown its
Microsoft business over the last two years and has worked with the
company for over ten years. The shop's work spans digital creative,
social and some media buying across Windows, Xbox, Surface, Bing,
Office, and Microsoft retail. Starcom MediaVest Group has the other
large piece of business at Publicis -- media buying and planning.
In 2011, Microsoft
moved its North America media buying account from IPG's
UM.
WPP
WPP's Wunderman is another agency with deep
ties at Microsoft and more than a decade under its belt. The data
and direct marketing giant supports various marketing tasks for the
company, including direct marketing, data and analytics across
brands like Microsoft, Xbox, Bing and Windows, as well as campaign
execution in local global markets. WPP's Y&R recently won creative and
digital work, Seattle-based Possible recently won web design work
for Surface, and VML also supports Microsoft. JWT has a history with the company but
lost most of that business over the years.
Interpublic Group
IPG long counted Microsoft as a top client across a handful of
agencies but over the years those shops have either lost most or
all of the work. Deutsch had been a major creative shop
on the b-to-b business, but Y&R recently picked up some b-to-b
assignments. UM lost its North America media account in 2011 but
held onto the international work. Reprise supports some search
business. R/GA was a digital shop on Windows but
lost the Surface work to Razorfish, largely due to a conflict with
its new client Samsung.
McCann works on Xbox in San
Francisco.
Microsoft works with a number of additional shops across brands
and disciplines.
MDC's CP&B has been one of the lead
creative agencies on Microsoft, handling brands such as Xbox,
Windows and the Windows Phone. Los Angeles-based independent
Omelet has picked up various pieces of
work, including an assignment for the Windows Phone.
According to agency executives familiar with the Microsoft
business, some agencies on the Microsoft roster last year had fees
and retainers slashed "substantially," and were then told they'd be
picking up business on a jump-ball basis moving forward – a
move that affected agencies across disciplines on both the B-to-B
and consumer accounts. Shops such as CP&B, Deutsch and Y&R
competed last fall for a business-to-business slice of work, for
example, with Y&R ultimately prevailing. The pitch-per-project
setup now appears to have been an interim strategy.
It also appears that Microsoft pared its lengthy agency roster
last year, according to the executives, and some of those that
remained were likely left wondering about their relationship with
the marketer.
Agencies mentioned either declined to comment or didn't
immediately respond to requests for comment.
Internal changes
The most recent change at Microsoft is the departure of CEO Steve
Ballmer, who said in August that he was leaving. The search for a
successor continues. Ford CEO Alan Mulally said last week that he
would not leave the automaker for Microsoft, ending widespread
speculation to that effect.
But the review is also approaching months after a major
reorganization this summer by Mr. Ballmer. The move created One
Microsoft, a concept meant to create one strategy across brands and
organize the company by functions such as marketing and engineering
rather than by brand. "We will see our product line holistically,
not as a set of islands," Mr. Ballmer said at the time. The move
created one centralized marketing group led by Windows CMO Tami
Reller and Microsoft strategist Mark Penn. Mr. Penn, a former
adviser to Hillary Clinton, stepped down from his post at WPP PR
giant Burson-Marsteller
to join Microsoft
in a top strategy role in 2012. He'd been leading the WPP agency
since 2005. One of WPP's market research firms, Penn Schoen
Berland, is co-founded by Mark Penn.
After joining Microsoft, Mr. Penn spearheaded the company's
effective "Scroogled" campaign, in which it attacked Google for
invasive ads in Gmail, sharing data with app developers and placing
paid results on its search page. By October 2013, Microsoft was
already on its sixth wave of Scroogled ads, which might explain the
heavy Bing spending reported from January through September of this
year: Bing spent $52.1 million on measured media just online,
according to Kantar Media. That's compared to $47 million across
platforms in 2012. In 2012, Microsoft's top spenders of U.S.
measured media by brand were Microsoft ($493.5 million),
Xbox/Kinect ($64.4 million), Bing ($47 million) and Skype ($10
million).
Mr. Penn is cited as a top decision-maker in the upcoming pitch.
Other key decision makers on the pitch will likely include Betsy
Webb, general manager of media and agency management, according to
people familiar with the matter.
Contributing: Maureen Morrison
