Microsoft Marketing Shop to Open in Hot San Fran Spot

Solution Studio 415 Will Offer CPG, Auto and Retail Companies Tech Ideas for Marketing

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San Francisco's SoMa neighborhood, the city's startup hotbed, will soon be home to a new marketing agency: Microsoft.

The tech giant plans to open an 18,000-square-foot space in December dubbed "Solution Studio 415." There, brand marketers will work closely with teams of Microsoft product designers, software developers and other technologists to come up with creative solutions to business problems. Microsoft isn't announcing any participants yet, but said Studio 415's focus will be on brands in the retail, auto and consumer packaged-goods categories. It will address issues such as "retail experience transformation" and "omni-channel marketing."

With the venture, Microsoft is looking "to inform what we're building with the priorities of our customers, and to give them early access to the kind of innovation that we expect to scale more broadly over time," said Rick Chavez, general manager of Microsoft's online-services division, who is overseeing Studio 415.

One hypothetical example: an automaker that wants to give customers a better experience in dealerships might work on a project with Microsoft to integrate a Kinect device in showroom vehicles, which could then use facial recognition to gauge whether they had liked the experience of sitting in the car. Or an Xbox could be put into the vehicle to let customers hear their own playlist from the driver's seat. The overriding idea is for marketer collaboration to inform the production of Microsoft's consumer-facing products.

For a tech company, Microsoft seems to be taking a unique approach with its clients. Google's efforts have been more on the agency side with its "Creative Sandbox," a resource for agency creatives to learn about Google products such as Android and YouTube through events and publications. With Studio 415, Microsoft looks to be bypassing agencies and going straight to brands.

Mr. Chavez said that Microsoft has been in talks with search and display advertisers and enterprise customers about the program, which could be expanded to New York if it catches on. Participation will be fee-based, but Microsoft declined to say what the fee would be. The goal is to concurrently accommodate two clients in the San Francisco location that would work intensively with Microsoft teams for a year and deliver an execution every 90 days.

Why did Microsoft choose San Francisco for Studio 415's base instead of Silicon Valley, where it has a campus in Mountain View? Mr. Chavez said the city felt like a hotbed of innovation with the presence of Twitter, Zynga and the myriad startups around the South Park neighborhood.

"It's become a fun mecca for digital innovators," he said.

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