Gates Commits Microsoft to Digital Advertising

REDMOND, WASH. Microsoft’s ubiquity in technology will make it an increasingly pivotal player in online advertising, Bill Gates said yesterday.

The Microsoft chairman said the company did not wait too long to commit to the advertising industry, since the business is only now shifting from traditional distribution methods to digital channels. As it does, Microsoft sees opportunities to re-aggregate audiences dispersed across many different channels, from the Web to Internet-powered TV to mobile devices to video games, all of which can be powered by Microsoft software.

“This is a rare case when we’ve been underestimated,” Gates told Donny Deutsch during a taping of The Big Idea With Donny Deutsch at the MSN Strategic Account Summit here. “We think we’re plenty early,” he added.

Advertising is now a sliver of Microsoft’s business, which is still centered on its Windows and Office products. The company, however, is investing heavily in advertising and media, recently telling Wall Street analysts it will spend more than $2 billion to develop its Xbox and search products.

“It’s hard to think of an advertising context that won’t be digitally delivered,” Gates said, citing a recent deal Microsoft made to deliver a digital version of The New York Times to portable devices.

In such a digital world, consumer choice will be paramount, as well as advertising tailored to individual interests, Gates said. Microsoft is building an ad platform, MSN adCenter, designed to serve targeted ads to audiences across many platforms.

Gates believes the ad world would soon shift away from buying proxies for audiences, such as running spots of TV shows likely to attract the target audience for their products.

“They won’t have to go through this indirect approach,” he said.