From business software to gaming and entertainment, Microsoft has been at the forefront of innovation and disruptive technologies. The digital advertising space is one area, though, where the IT giant's success has been indifferent so far, when compared to some of its peers. However, with a new leadership in place, the company seems keen to lay claim to this new frontier. We spoke to Adam Anger, General Manager, Advertising and Online, Asia Pacific at Microsoft, to understand more about the company’s new digital advertising strategy, the future of the revamped MSN, the state of the current search partnership with Yahoo, among other things. Excerpts.
What challenges does today’s digital world throw up for a company like you?
There are a few things that Microsoft as a company recognises. We are in a very different world today then what we were even five years ago. This is a very device-dependant world and most people are accessing the internet through mobile phones or tablets and many of these are not Windows-based. As a company, we had to really think about how we deliver services to consumers and businesses in a way that recognises the world we are in today. A world that is defined by mobile-first and is all about delivering information via the cloud, because if you are in a mobile-first world where people are accessing the internet through the cloud, you need to have a mechanism that allows you to deliver those experiences across many different screens. So, as a company, we have really re-thought or re-strategised all of our product lines to make sure that we are serving both consumers and business with services that are cloud and mobile first. This has a lot of different implications. This means we need to re-architect and think about how we are going to make money on these services because making money on services versus software is a very different business model.
Would you say that the focus on digital advertising has increased post the leadership changes in the company?
Absolutely, there is no question. If you look at the changes that Microsoft has been making as a company; we have been a company that has been largely focused on maximising Windows and Office. If you look at the way the strategic direction I mentioned earlier about empowering consumers and businesses in a world that is cloud and mobile first. That means we are not going to be tying everything to the Windows platform. In a services-based world we know that a lot of consumer services are free. That is the growth pillar for the company, cloud-based services. We know that advertising is a very critical piece of monetising these services. More so than ever before we have more engineers focusing on innovating on the advertising and platform technologies that will power the advertising capabilities within our digital experiences.
So, absolutely, more than ever before, advertising is a fundamental, strategic commitment of the company to power growth.
India is a ripe market when it comes to digital advertising. What are your plans for the country?
India is definitely in top tier. We prioritise India as one of the geographies where we expand our advertising portfolio for brands. We want to bring advertising into more of the digital experiences in the future and it is also one of the first markets where we will be launching our new advertising platform that underlies our digital experiences. India will be one of the first wave of eight countries which will benefit from some of the innovation in the next couple of months.
Has search-based revenue from India increased?
It is growing substantially year on year. That’s a result of bringing together our combined traffic on one platform and it is also a result of the way we sell. Selling to premium advertisers and SMB advertisers. We share the responsibility. Yahoo is responsible for premium and we are SMB. If you look at the combined search traffic for Yahoo and Microsoft we have an opportunity. People are hungry for alternatives where they can put their search dollars. If we can bring a great solution, that is where the growth opportunity is.
You just launched a preview of the new MSN. How does it fit into your overall digital strategy?
In the consumer space we are committed to delivering an array of services which are now available across a range of devices. One of the biggest steps forwards for the new MSN is re-imagining the product for this cloud-based world that is mobile-first and we are going to ensure that the experience is great and consistent across Windows, iOS and Android-based devices. This is a big step forward for the company. We do have a MSN product that has been pretty much browser-based. We have Bing apps for desktop and Windows phones and we are now going to make this available to iOS and Android as well. We are also thinking about MSN as a new experience that brings together the app world and the browser world together as a common identity. There are not too many companies doing this well today. We believe there is a big opportunity to provide value and experiences in this and it is a big step in the context of where the company is heading.
The other theme we are focused on is productivity. We took a measure of what our company is known for. Ninety-seven per cent of people who work in an office environment use Microsoft Office. We know we have had humongous reach of different consumer online services whether it is Skype, Bing, Outlook.com. Our focus is that whatever we get to market, has an underlying theme of empowering people with great productivity, with everything available on the cloud.
The plan seems to be towards creating MSN as a premier digital destination.
MSN has been in existence for 19 years in different forms with 4,25,000,000 users around the world; in India we have just under 50 million users. We have a legacy of MSN as an established and trusted source on the web. But we are now re-imagining the role of MSN. First of all, it is going to represent the most comprehensive content by any media owner in the business. We are stepping out of the content business and completely focusing on partnering with the world’s largest media brands. We have launched the preview with more than 1,000 companies across categories like food, health, news, finance, sports, etc. In every individual market, which is 52 markets, we are ensuring that we partner with the best, premium content to bring in the best experience.
I spoke about productivity earlier, which means that we are building into many parts of the MSN experience the ability and tools which people can use to get their work done. We will integrate providers of utilities such as Booking.com or Tripadvisor, to help plan your holiday or integrate recipes and create a list that you can carry around. Another example of these utilities is helping you to find the right workout video and keeping track of whether you are on track with your diet and fitness plan.
Third thing is being personalised. We want to ensure that the MSN experience is more personalised than anything else out there. This is going to be super important for brands in terms of advertising as well.
You spoke about bringing the app and browser worlds together. What is the road ahead for the existing Bing apps?
The existing Bing apps will be renamed as MSN applications. We will also introduce new applications for iPhone and Android devices which do not exist right now. So that is a completely new audience and reach that we have on mobile.
What is Microsoft’s digital advertising roadmap?
Making sure we identify consumer-friendly integration points across most of our consumer experiences or online services for brands to engage. If you look at the portfolio of services we have, there are very unique experiences for brands to be a part of. For example, with Skype, advertisers can engage with the webcam as a part of an advertising experience.
Second is building great reach. We know we have great and sometimes different reach. Our focus is on how to increase the overall reach. For example, how can we bring the nearly two thirds of Skype users not using MSN into the MSN experience and also expand the user base across different platforms like iOS and Android?
How can we simplify the way brands can connect with all these experiences in true multiscreen fashion? We are investing in a set of technologies and platforms that enable simple, cross-screen integration for brands. This is important because brands recognise that we have a set of great strengths due to a portfolio of different digital experiences. We have not made it simple to do it yet, but our new generation of advertising platform will allow brands to connect sequentially with different messaging and retargeting capabilities, allow true multi-screen execution of campaigns where you can do unduplicated reach across our network and then have reporting and analytics to see the engagement level.
It seems you want to create a network of premier content properties similar to Google Display Network (GDN)?
I would say that GDN is different. What we are trying to do is innovate on the platforms that connect a lot of the Microsoft digital experiences in a way that is simpler for brands, not just programmatically. A lot of these are going to be new and creative brand experiences, which could be partially done programmatically but could also be unique campaigns run for brands. We will bring a bit of third party-inventory but the focus is on providing a simpler way to bring campaigns across all the Microsoft properties.
Since you mentioned programmatic, how important is automated ad buying in the scheme of things?
Programmatic means many different things to different people. There is a role for automated buying of advertising impressions. When people want to reach audience with a particular campaign goal, sometimes automated or programmatic campaigns can be a cheaper way of doing that. We have already introduced the Microsoft Advertising Exchange, which is our programmatic platform. We are open to people who want to buy inventory programmatic. In some regions, including Asia-Pacific, programmatic has become a much larger percentage of the ad spend.
Automated ad buying will not completely replace humans, because there is always a role for human intervention. What we could see is the manpower and resources freed up due to automation being used for more high value functions.
The Yahoo-Microsoft search partnership is about to enter its 5th year. How has the journey been so far?
Search is an important part of the digital marketing equation. We are performing really well with the partnership with Yahoo. We launched the Yahoo Bing Network in India about two years ago. In all markets that we have a partnership with Yahoo, we have completed the migration of Yahoo advertising to Microsoft technologies. We have been seeing really strong results in these markets in terms of the value that is being delivered to advertisers. It has exceeded expectations, at least for Microsoft and we think, going forward, the value of the partnership is going strong.
There were rumours earlier this year that Yahoo wants to get out of the partnership. Your comments.
Both of our companies are going through a lot of change. We continue to meet and discuss the future of the partnership but as of now we are both committed to making the partnership successful.