A New Player Has Entered The Game: Microsoft On Xbox Advertising And Online Video

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ferris msftScott Ferris, GM of television and video at Microsoft Advertising, has been in the video biz for around three decades. For seven of those years, Ferris has been at Microsoft, heading up its video business group.

Most recently however, he’s taken the lead role in what Microsoft calls its Content and Entertainment business group, which includes managing advertising for Xbox.

“The advent of broadband and the advent of player technology, video is growing exponentially in terms of media consumption,” he told AdExchanger.

AdExchanger: Is Microsoft also active in addressable TV?

SCOTT FERRIS: When you say addressable TV, we are involved in the connected TV space. That’s any device that’s connected to the Internet and either displaying entertainment apps or video content on a TV device. Obviously, Xbox is a connected TV device. We also are establishing partnerships with other kinds of publishers who have presence on connected TVs like Roku. We partner with them as a distribution partner in the sales channel for entertainment app content partners.

How does advertising in that environment work? As a consumer, where will I see the ads?

It’s mostly the traditional preroll and interstitial ads. That’s the predominant video advertising venue in digital. Re-purposing of linear television 30 second spots into digital content. That’s what we do on Xbox, MSN, and any other platform where we insert video ads.

Xbox is a little different because we have some custom branded experiences. We own the platform and we work with brands to create these experiences that are rich, immersive experiences. We partner with their creative agencies on building those experiences. That includes display, rich media and interactive components. Think of it as a landing page, but in our Xbox service.

We have on our dashboard, the ability to create a display ad or a video that will play when you hover over the title. You can click on that display or that video and it’ll take you to a landing experience.

Microsoft’s next-gen console Xbox One initially was intended to be always on. Since that’s no longer the case, how did that impact your plans around Xbox and advertising?

We were responding to our gaming community and our users wanting choice. It’s not that the device is always on or always off. It’s the choice of the consumer, whether they want it always on or want the ability to turn it off. So it hasn’t effected the advertising at all. When it’s always on and you step in front of the Kinect device, the natural user interface device, it’ll recognize you and bring up your personalized content experience and your homepage.

I would imagine you get a richer data set when it’s always on and can more personalize the experience.

That’s correct. It’s really in response to the consumer request to have that option that we changed it. We’re always continually having a feedback loop with our users and fanbase to learn how they would like feature functionality to evolve.

Do video game publishers participate in advertising initiatives?

It changes based on the publisher and based on the game title. We have deep partnerships and consult with those publishers on a title-by-title basis. We work with them to determine what is their strategy with respect to the gaming experience, what is their monetization strategy, and how can we support them from a technology and business standpoint.

Can you give me an example of a tight partnership?

One example is Ubisoft’s “Assassin’s Creed” series. They’re evolving and considering ways to integrate brand experiences.

How would that work in the “Assassin’s Creed” universe, which takes place in various historical time periods?

It’s under development now. It’s not necessarily in the game, but it’s on the console. One great example is in “Forza”, the racing game. When you’re on a track, you’ll have sponsorships on the banners on the track. That’s an example of how you integrate advertising into the gaming experience. Gamers have given us feedback that when you have appropriately placed sponsors and advertising, it makes the game more credulous. It makes the experience much more real because it’s like real life.

Can those banners be swapped out, if you get a new advertising client?

The technology exists to do that. But it’s predicated on how the publisher wants to build the game experience. In some cases it’s baked in and there’s no ability to dynamic insertion. In other cases, there is dynamic insertion.

If a publisher wants to do that, do they have to get Microsoft’s approval?

Of course. The code on the platform is proprietary code. We’ve enabled the platform to afford the publisher the opportunity to monetize through advertising and sponsorship. Over the course of the creation of the title, we consult with them and talk about what their goals and strategies are, what their business model is, and work with them accordingly.

Going to the non-console video space, do you work with a video distribution platform?

We mostly work with FreeWheel. We also have partnerships with other technology companies where we want to complement our own stack.

Does the Comcast acquisition change anything?

Not at all. FreeWheel in particular is a partner that, to our understanding, will remain independent.

What’s the status of viewability measurements?

When you think of Microsoft, think of us as Switzerland in terms of the video metrics. You have comScore and Nielsen as the two major measurement companies. We work with both of them. Today, we execute campaigns based on GRP (gross rating point) guarantees with our agency partners, and it’s mostly on the Web PC platform. We’re working with both Nielsen and comScore as it pertains to solving for GRP on platforms that don’t have a cookie, like mobile or tablets.

The whole industry at large is facing the challenge of how to implement GRP demographic compositions with the absence of a cookie. We’re working with both companies to solve that.

Where is the industry in that?

It’s nascent in solving for cookie-less platforms and devices as it pertains to GRP. But everybody recognizes the GRP is important for the buying community and brand advertisers and everybody is pursuing the solution of a GRP campaign execution on devices that do not have a cookie. I’d say everybody is pertty much in line. Obviously, Microsoft has a much different ecosystem of devices. We’re differentiated in that we have a Web PC presence, an Xbox console presence, mobile presence and tablet presence. We have a much fuller suite of devices and services than some of the other cookies in the space. So we’re leaning into the whole solution for GRP across our ecosystem.

What’s the difference between Nielsen and comScore?

It’s the methodology in how they look at their panel. Nielsen has deep experience in linear television so their panel tends to have fewer panelists than comScore. ComScore uses their digital panel for online video, so it’s a more robust panel. But Nielsen has more robust cross-screen capabilities. Each one has strengths and weaknesses based on where they came from in terms of the approach of their panel.

Obviously, comScore came from the web and they have one million and a half in their panel, and they lay online video on top of that. Nielsen comes from the linear TV panel, and that’s 20 thousand on the linear TV side, and they’re building out their online panel which I believe is somewhere to the tune of 120,000, I think.

I’m not precisely sure about the actual numbers, but it really depends on which business they’re coming from in terms of how they’re building out GRP-based panels.

Do you work with either comScore or Nielsen depending on the situation, or do you combine the two metrics into a sort of unified comScore-Nielsen measurement?

I use the phraseology that we’re Switzerland because whatever our advertising and brand partners prefer is what we’d support. A lot of times, an agency will come to us and say they’re using comScore vCE to validate an audience demographic on the platform. They’re using the vCE set of analytical tools and planning tools, so we’ll support vCE. In other cases, an agency partner or brand will prefer Nielsen OCR, and they’re using Nielsen tools and analytics, and we’ll support Nielsen in the GRP.

Are there other independent companies out there measuring video?

Besides GRP? There are others out there doing viewability metrics, but they’re more niche around the display category and they’re still creeping into video. But what happens is this duality of panel companies in the GRP space, which are also putting spend into viewability metrics. So it’s really about the IAB standard and what the MRC is accrediting. That will evolve to be more the standard in GRP and viewability.

How is video inventory typically purchased?

Online video has been moving down the path analogous to TV. There’s the digital content NewFronts and that’s sort of a traditional upfront buying rhythm where all the media publishers on the Internet are showing what content they have available on their properties, and what advertising is available for sale. That’s being negotiated on an upfront commitment. Then there’s an emerging trend like display, where some video is purchased on a programmatic purchase. That’s more workflow automation for the agency than it is about real-time bidded inventory. There is some real-time bidded exchanges that are available to the buyers, but I would consider them to be more mid and long-tail type video. Not the premium content that you’d find on a lot of larger sites.

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