Microsoft veteran Greg Nelson claims that the rumour about Microsoft leaving the ad business has spun out of control and couldn’t be less true. At least not anymore.
Nelson, general manager of display advertising for Microsoft’s online services division, addressed the issue in a blog post Monday. This comment may come as a surprise:
As someone who has worked at Microsoft for 15+ years, I can say this with unflinching confidence: our digital advertising business has never been more important to the company, more integral to our future, than it is today. Never.
There has been widespread speculation about the company’s role in advertising for the past two years.
Anonymous sources told Business Insider in July 2012 that the company’s decision to make the “do not track” cookie-blocking feature the default setting in Internet Explorer created tension with advertisers and within Microsoft’s ad division.
A slew of ad execs left the company, and by October, Adweek basically declared that Microsoft Advertising was heading to its grave.
Microsoft sold the Atlas ad server to Facebook in February of this year for a mere $US30-50 million — a move that seemed to dovetail into this narrative. Atlas was a bit of a dinosaur, but it still represented 20 per cent of the ad serving market. It led some observers, like Adweek’s Mike Shields, to suggest that Microsoft could be planning to outsource advertising to Facebook or Yahoo.
Nelson wrote that when an unnamed “veteran of the advertising media” asked him earlier this year if such a theory were true, he was taken aback. He said that the speculation was based on the “disconnected events” of the sale of their ad firm Razorfish to Publicis in 2009, the write-down of the ad-tech company aQuantive they acquired for $US6.2 billion, and the sale of Atlas.
Nelson admits, however, that advertising was not a big priority for Microsoft in the “not-too-distant-past.” For him, he said it changed when the company’s outgoing CEO Steve Ballmer outlined a new strategy focused on devices and services this past July. Nelson wrote:
Our job as the leaders of the advertising business at Microsoft is, therefore, to help drive consumer preference for the Windows ecosystem (including Windows 8.1, Windows Phone, and Surface) as well as for Skype, Xbox, Office, and our other devices and services, by creating an environment for app developers to build rich, engaging experiences that consumers will want. In this construct, “advertising” becomes much more than slapping an ad on a piece of digital real estate, it becomes the connective tissue that brings marketers, developers and consumers together.
At the end of 2013, things are looking better for Microsoft Advertising.
Microsoft, Apple, and Google are creating their own cookie alternatives to track Internet users for advertisers, and Apple’s Safari browser and Mozilla’s Firefox browser followed Internet Explorer’s once-controversial decision to block cookies.
Microsoft’s strong third quarter earnings report showed that its revenue was $US18.53 billion, topping the expected $US17.79 billion.
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