Microsoft to Increase Ad Business

Posted by sumeethevans on October 4 2007, 8:59 AM. Posted in adCenter.

Steve Ballmer, the chief executive of Microsoft, vowing that the company’s $6 billion plunge into the ad business two months ago was not just an experiment, said today that advertising would become 25 percent of the company’s business within a few years.

That, he said, would be about the same amount of time it would take for all media and marketing to go digital.

“Over time, all ad money will go through a digital ad platform,” Mr. Ballmer told a gathering of European ad agencies and clients. “All media goes digital; all advertising goes digital.”

Mr. Ballmer’s remarks came the same day that the British online advertising trade group, the Internet Advertising Bureau, reported that Internet marketing had grown 41.3 percent in the first half of 2007 and now accounted for 14.7 percent of the British ad market.

The total British market grew 3.1 percent during the first half of the year, to £9.1 billion ($18.2 billion). Without Internet advertising, however, total media spending would have fallen by 1.9 percent. “Once again the Internet has propped up the U.K. advertising economy and remains the fastest-growing advertising medium,” the group said.

Microsoft became a player in the ad business with its August purchase of aQuantive, which provides a technology that places ever-changing Web site ads in front of Internet viewers, based on specific conditions.

Now, Mr. Ballmer is trying to convince media specialists that Microsoft is serious about catching up with Google as the digital brand of choice for advertisers, who spend about $550 billion a year worlwide.

Mr. Ballmer declined to comment on recent media speculation that Microsoft was interested in buying a stake in Facebook, the social networking Web site, saying only that he was “very excited” to be Facebook’s digital advertising supplier.

But he did say that Microsoft was not in danger of losing its focus and turning into an entertainment company. “ ‘Brand Microsoft’ should be seen as a software competence company,” he said, adding that the company had other brands with other roles, like the Xbox game console.

Microsoft has more to overcome in Europe than just being No. 2 in advertising, after having lost its appeal of the European Commission antitrust judgment against it last month.

This week Forrester Research released a study of online consumers and technology brands in Europe showing that Microsoft scored low in trust among regular users.

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