It's An Ad Platform, But Not As We Know It

If you are a professional marketeer feeling anxious about the ever-encroaching algo-driven power of Google's search platform I've got some good news and some bad news.  Let's start with the bad news.  At an event this week in Paris, to which I was invited along, Microsoft laid out a vast strategy to reshape the global advertising industry called Microsoft Digital Advertising Solutions.  And they clearly mean business.  The launch featured the usual dizzying storm of corp-speak promising a world of integrated platforms, dynamic environments and the leveraging of value.  But scratch beneath that corporate layer and it quickly becomes apparent they've strapped together a formidable range of technologies in all the major growth areas, and stuck the whole kaboodle on a couple of billion dollars worth of clustered data centres around the world.  It's not new-new but hearing about it first hand brought home one main fact.  It's absolutely huuugge.  The result - or at least the aspiration - is to provide advertisers with a one stop shop to reach...

...any desired audience using any combination of digital devices, at any scale, anywhere in the world.  All of which has been designed to fit the Microsoft world view which can be summarised as all marketing being digital and all digital being marketing. 

IPTV campaign running personalised ads, plus in-game product placement and sponsorship of opted-in IM users interfaces, in fourteen European countries?  No problem.  Mobile banner campaign across AsiaPac spearheaded by enhanced search and behaviourally targeted pre-roll adverts.  Leave it with us.  Community-focused programme across a gazillion Spaces blogs and a campaign on the MSN juggernaut.  Just say the word.

The aim is impressive.  Microsoft wants to fix the world's global advertising markets - which still rely on pen-and-paper systems such as Nielsen's Ratings.  And in doing so drive out the massive inefficiencies of a world where most adverts are completely irrelevant to the audience that watch them and response rates of 3 per cent are seen as a big success.  Furthermore, the new mega-platform will be driven by supersonic levels of computing power which will crunch every single bit and byte of consumer clickstreams, with all the resulting insights being fed back into the system to make it more effective.

And the goal is clear.  When I asked Microsoft CEO Steve Ballmer whether Microsoft's aim was to swallow up the world's $400bn advertising market or extend it.  His answer was simple - "it's a $550bn dollar market'.

All of which adds up to a pretty impressive plan backed by some eye-watering sums of cash and (whisper it) one that make Google's single, albeit vast, revenue stream look a bit vulnerable.

So what's the good news you may well be asking?

Well, Microsoft may be about to radically step up their aspirations in the world of advertising, but they have decided to play nice.  They think that they their best chance of slicing off a large piece of the advertising pie - and preventing the whole market being run by Google - is to co-operate with the advertising industry not try and vaporise it.  Ballmer and co have decided they need the people who understand the more subjective part of the marketing equation, otherwise known as branding, which even the most powerful algorithms can't get their processors around. Yet.

It's an ad-platform on an enterprise scale.  In terms of the ad industry's, long-term mega-morph onto a digital platform, it's not the end. It's not even the beginning of the end. But it is, perhaps, the end of the beginning....

Business Week's coverage here.

Comments

[Andy Bargery]

Sounds extremely interesting and great that Google will finally have some decent competition in the digital advertising space. If Microsoft takes it's typical approach - i.e. enter a market, dominate and drive out the others, then google had better pull it's socks up...

[James Cherkoff]

Thanks Andy, there's no doubt it's a deadly serious play. It's a huge programme so it might take a good while to get moving but I got the feeling that Ballmer is more than happy to fund it with revenues from the rest of MS...for as long as it takes.

[Alex Barnett]

Name dropper ;-)

[James Cherkoff]

Clunk! ;-)

[Aurelius Tjin]

Very well-said.

Microsoft can get really radical at some point.

[James Cherkoff]

'Radical' and 'Microsoft' aren't exactly an obvious choice Aurelius but iwas quite clear from Ballmer's speech that Gooogle has got him fired up which may tip his desire to change the game just about into the radical zone.

[Brad]

Sometimes dominance isn't such a bad thing. Google has yet to prove it's dominance has any serious negative consequences. After all, they created the ad space from scratch while we all stood knee deep in paid-search-results doo doo, otherwise known as the 'death of search'.

Similarly, people get upset by the "dominance" of iTunes, which is really only a problem for gigantic multi-national corporations, ie. Apple has taken power from *them* - which seems a good thing to me. Nonetheless, people are afraid of dominance.

Given the situation, having Microsoft offer competition is a far scarier prospect than Google domination. Better to live in a Google-dominated world than a Microsoft one.

[James Cherkoff]

Provocative as ever Brad, can I press you a little more as to why Google is OK and Microsoft isn't...?