MSN Summit Spotlights Company’s Ad-Revenue Push

Microsoft’s MSN held its fourth annual Strategic Account Summit last week—a meeting of key advertisers and agencies—and spent much of the two-day conference demonstrating the level of commitment it has to getting media dollars flowing to its online properties.

During the conference’s closing session, CEO Steve Ballmer told the 350 attendees that “MSN is kind of a flagship for us.” He said he sees the brand’s future as “a very broad, horizontal relationship [with consumers] that is primarily an advertising-funded relationship.”

The conference covered a broad range of online-advertising issues, including best practices for interactive marketing, cross-media case studies and future versions of MSN. Breakout sessions focused on marketing categories that included automotive, entertainment and retail.

The meeting capped a year in which the Microsoft online property has worked mightily to woo marketers who until recently viewed the software behemoth with skepticism, if not outright disdain. “The past 12 months for MSN have been a tremendous turnaround from our perspective,” said David Cohen, svp, interactive at Interpublic Group’s Universal McCann, which has worked with MSN on Coca-Cola, among other clients. Cohen cites two changes: improved technology-—which allowed Coke to change the usually blue MSN home page to red during the launch of the “Real” campaign-—and a renewed effort to build relationships with agencies and advertisers.

“[The summit] is a little bit of our call to the industry,” said Joanne Bradford, MSN chief media revenue officer and a former top Business Week ad sales exec who joined the company in late 2001. She outlined three ongoing initiatives designed to change MSN’s reputation: broader adoption of rich media; the formation of a solutions group to craft individualized programs for advertisers; and making the task of buying and selling online media easier. She admitted that the last goal, which requires a degree of standardization and cooperation among major online players, would be the hardest to achieve.

While troubled competitor AOL’s 2002 ad and commerce revenue dropped 39 percent, MSN expects a 40 percent increase, to approximately $700 million, in those revenue lines for its 2003 fiscal year, which ends in June. With the exception of AOL, most major online publishers are showing year-on-year gains.

Still, the goal of moving online advertising beyond its post-bubble bust remains to some degree an industrywide effort. MSN took the unusual step of holding a panel discussion that included Lon Otremba, evp of interactive marketing at AOL; Greg Coleman, evp of Yahoo! North America; and CNET CEO and Interactive Advertising Bureau chairman Shelby Bonnie. The panelists took on industrywide issues, such as convincing marketers that online advertising is working. “Without the proof and without the qualified research, it’s going to be very hard to do this,” said Coleman.

While the conference focused on ad revenue, Microsoft executives are also working to build subscription growth at the MSN online service, which remains a trouble spot. (MSN encompasses both its online service and a number of free properties, such as MSN Carpoint, that reach 300 million unique users a month.) MSN made one management move during the conference, promoting former brand communications manager Eric Hadley to director of marketing and advertising sales.

In October, the company launched a $300 million campaign from McCann, featuring the ubiquitous rainbow-hued butterfly, to herald the arrival of its newest software release, MSN 8. “We have momentum in that the brand is starting to be recognized,” said Hadley last week.

Although company officials seem pleased with the campaign concept, they admit it has not moved the MSN online service from its subscriber base of 9 million members. The adoption of broadband by consumers—who purchase the service from cable and phone companies—caught the company off-guard. MSN is expected to roll out a number of lower-priced “bring-your-own-access” subscription services to confront the growing broadband market.