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Microsoft Corp. plans a burst of Web spending in its new fiscal year in a bid to remain the No. 1 Internet advertiser.

The software giant will, however, hold the line on print and TV ad spending.

Exec VP-Chief Operating Officer Robert Herbold said Microsoft likely will boost Web spending by 50% to 70% from the $24 million he said the company spent in fiscal '97, ended June 30. That suggests a Web budget of $36 million to $41 million for the new fiscal year.

"Our best customers are really Web savvy," Mr. Herbold noted.

Technology buyers also tend to demand a mass of targeted information, and "the Web is perfect for that," he said.


Mr. Herbold said the global print budget-estimated at $140 million for fiscal '97-will rise by about 7% to stay even with media inflation. The global TV budget will increase by a similar amount from the estimated $100 million spent in fiscal '97.

The figures suggest Microsoft's estimated total global ad budget will increase from $264 million in the year just ended to $293 million to $298 million in fiscal '98, an 11% to 13% increase.

Most telling, Mr. Herbold said it is conceivable Microsoft's Web ad budget will exceed the software marketer's TV budget by the beginning of the next decade-a remarkable vote of confidence in the emerging media platform.

Microsoft won't decide till late this calendar year how big an ad effort to make for its upcoming operating system, Windows 98, but that could mean a boost in budgets, Mr. Herbold said.


Even so, the Windows 98 launch won't reach the blowout proportions of the unprecedented Windows 95 rollout, which saw Microsoft spending an estimated $180 million on a massive TV campaign.

"We've become a lot more efficient in what we want to do," Mr. Herbold said.

On the Web, Intel Corp. next year likely will overtake Microsoft as the biggest ad spender as it makes $75 million or more available to PC makers in Web co-op money (AA, July 28). But that money will be spread among hundreds of PC makers, while Mr. Herbold said Microsoft will remain the single biggest Web advertiser.

Mr. Herbold, the former senior VP-advertising and services at Procter & Gamble Co., joined Microsoft in November 1994 on the same day the company broke its first global brand campaign.

`B+ TO A-'

The campaign-created by Wieden & Kennedy, Portland, Ore., with the theme "Where do you want to go today?"-gets a "B-plus to A-minus" grade from Mr. Herbold.

While tech ad types often complain Microsoft's work lacks the style or appeal of work from rivals such as IBM Corp., Mr. Herbold said, "You never worry about whether it has a buzz or not. You worry about whether it is performing."

Agencies, media and Microsoft managers have had to adjust to the intense P&G-style research and testing Mr. Herbold applies to advertising. He contends work from Wieden and Microsoft's second shop, Anderson & Lembke, San Francisco, is performing "stronger and stronger."

Mr. Herbold stressed Microsoft has no interest in talking to other agencies.

"We're very satisfied with our current agency configuration," he said. "You don't want to change advertising agencies very often because they are valued partners."

And Mr. Herbold offered strong praise for his lead shop: "Wieden & Kennedy is a class agency that has very few clients by design, and they totally commit themselves to the success of those clients. That's what an ad agency is all about."

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