Buyers: Is Microsoft's Ad Focus Marketing or Math?

Generally speaking, ad executives usually boast B.A.s, not Ph.D.s. So more than a few heads were scratched across the digital landscape with Microsoft’s announcement last month that it had hired Dr. Qi Lu as president of its Online Services Group. Lu’s hiring, coupled with the impending departure of the highly respected Brian McAndrews, former CEO of aQuantive and senior vp of Microsoft’s Advertiser & Publisher Solutions Group, has engendered some consternation among the digital buying community. The fear is that Microsoft—always suspected as being a half-hearted media player—was doubling down on its thus-far fruitless quest to beat Google and drifting further away from the traditional publishing and advertising world. “It’s just unclear what message they are trying to send to Madison Avenue,” observed Ed Montes, regional manager for Havas Digital in North America.To some, the message being sent is that better engineering would solve all of Microsoft’s ad challenges. “Microsoft is and always will be a technology company first,” said Jordan Rohan, founder and partner of the digital media advisory firm Clearmeadow Partners. “They are always going to look at search as a complex, software/algorithm problem they can solve. To a hammer, everything looks like a nail.”Something needs to be done, since Microsoft’s search market share continues to founder, dropping from 12 percent to 9.1 percent last November (per Nielsen Online), six months after the company introduced its vaunted cashback program, which rewards online shoppers with cash.According to Bryan Wiener, CEO of digital/search agency 360i, it may not matter if Lu and his team create a search product that performs better than Google. “This is not necessarily about who can build a better mousetrap,” he said. “This is a marketing challenge. Whether Google has a better search engine or not, people feel like it does.” So do most buyers, which is why Microsoft often needs to package search as part of comprehensive media programs, something McAndrews—who was versed in the ad business and technology—was skilled at articulating, said Wiener. “A media person helps package search to marketers,” he said. For example, “Cashback was presented [last May] by Bill Gates of all people. Then you never heard anything about it.”Scott Howe, who was promoted to corporate vp of Microsoft’s advertiser and publisher solutions group following McAndrews’ departure, acknowledged that the company may simply need to get out and explain its recent restructuring to the ad world. “That’s a fair assessment,” said Howe. “We need to be out evangelizing our offerings more. That comes with time.”But Howe defended the company’s ability to meld advanced ad tech and old-school marketing art. “Are we ‘not customer-centric;’ are we complete engineering types or technophiles? The answer is No, No and No,” he said. “Search continues to be very, very important to us.” But the science part of the online ad business is about improving both display and search, he contended—and provides Microsoft a long-term advantage. “If all we are is client-centric, we’d be like a lot of other premium publishers out there,” he said.Howe also said he believes Microsoft’s new leadership will thrive post-McAndrews. “He built a great team and they’re still here. Qi is also different than Brian. He understands how technology can be applied to online advertising [and] he is comfortable talking about the business to clients. I don’t think we’re going to miss a beat here.”Insiders at Microsoft report that while staffers were initially uncertain about Lu’s hiring, morale is generally strong. And many apparently hold high hopes for the hiring of longtime Time Inc. executive Robin Domeniconi, the newly installed vp U.S., Microsoft Advertising, who is based in New York (the first time Microsoft has placed its top sales exec in Gotham).Yet many in the industry wonder whether Domeniconi will have the power she needs to succeed, particularly in light of Lu’s hire and the upcoming departure of her boss Bill Shaughnessy, global vp of sales, marketing and services. “It’s about who’s in charge,” said former AOL and Tacoda exec Dave Morgan, who’s now chairman of The Tennis Company.To others, Microsoft’s new leadership is symbolic of an overall, much-debated shift in the online ad business toward technology-driven ad solutions. For example, all three of the portals have put in place executives who are not of the sales-pitch-over-lunch world. “These people came from a creation-of-media inventory, inventory-management background,” said Rob Norman, CEO of GroupM Interaction. “Hillary Schneider [executive vp of Yahoo U.S.] and Qi Lu are super smart people. But Qi Lu is not Richard Beckman [president of Condé Nast]. It kind of depends on what business you think itis … whether it’s a math problem or not.” To Norman, that sort of math-rules thinking results from trying to catch Google—a media company that hardly resembles any other. “If Microsoft were to think of themselves as competitors to NBC, for example, that might lead them down a different path,” he continued. “That’s one of the real divisions in this marketplace.”

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Buyers: Is Microsoft's Ad Focus Marketing or Math?

Mike Shields

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