Microsoft Bailing on Mobile, Branded Web Video Ads

Round of layoffs indicates major shift away from brand advertising business online

Is Microsoft signaling that the company is getting out of the brand advertising business? Its latest round of layoffs sure seem to indicate so.

On Wednesday (July 11), the company initiated an expected round of layoffs with the Microsoft Advertising division, according to the Wall Street Journal. Officials at the software giant did not provide any hard numbers, but as first reported by Adweek, between 15 to 30 percent of the group’s sales force was expected to be eliminated.

What’s interesting is where those cuts were concentrated. According to sources, Microsoft has completely eliminated its mobile advertising team, with the exception of Jeff Plaisted, director of sales and strategy, mobile & Skype Advertising (perhaps indicated that Skype is about to take on a more prominent role in Microsoft’s ad strategy).

Also taking the brunt of the cuts was the Global Creative Solutions team, which housed Microsoft’s much praised branded entertainment business BEET (Branded Entertainment Experiences Team). BEET director Russ Axelrod was said to be among the execs taking severance packages.

Per sources, the remaining members of the Global Creative Solutions group, including veteran gm Stephen Kim, are being shifted into positions focused on promoting Windows 8 to app developers, a fairly dramatic departure from brand advertising.

Thus, with this round of layoffs, Microsoft appears to be scaling back on two of the fastest growing sectors in the media business overall: mobile advertising and Web video. According to insiders, the moves signal an overall shift away from Microsoft selling advertising to brands using human beings, as the company further embraces automated ad selling.

Others divisions hit by cuts include Atlas, Microsoft’s neglected ad server, and several regional sales offices, including Dallas. The Atlas cuts are hardly a surprise, as Microsoft recently took a monster write-down tied to its purchase of Atlas, and parent company aQuantive back in 2007.

Among the executives let go Wednesday included Mel Carson, who posted a message about the layoffs on his personal blog, which has been circulating across Facebook.