Incubating Ads on Skype With Microsoft's Jos Moore

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Microsoft AdvertisingWith close to 10 years of online ad experience, Jos Moore has seen different roles and roll-outs as part of the ads unit team at Microsoft. Today, she's the GM in charge of "advertising incubations" at Microsoft which includes incubating the next ad 'steps' for online calling service Skype - formally acquired by Microsoft in October of 2011.

Unlocking the revenue potential while balancing consumer needs and even regulatory concerns is tricky, to say the least, as ads are placed in a phone call environment. At the same time, the scale of Skype is impressive with 250 million connected users per month, 100 million people connecting daily and "in Q3 FY12 Skype users made more than 100 billion minutes of calls, an increase of 40% from the prior year’s third quarter," according to the a company spokesperson.

That's scale and engagement a brand marketer could love.

AdExchanger spoke to Moore about the potential for Skype ads.

AdExchanger: Why is it that Skype needs 'incubation' for advertising?

JOS MOORE: If you think about Microsoft's advertising business, we have some big investments and mature businesses, and rhythms and process, and play on a global field in many markets. It's a machine, which is great, especially for things that people are familiar with. But how do you bring new opportunities to market quickly?

For Skype - and the reason why it's considered an 'incubation' - we didn't want to push into the field without some extra special consideration. We want to explore what new opportunities are going to look like, and understand the true value of Skype because it is an amazing consumer asset and a growing one.

We didn't just want to slap something in the environment and forget about it. Skype is all about 'consumer first' and, with the ad experience, we are going to do the same thing.

Again, if you didn't have someone focus on it as an incubation, it probably wouldn't get the attention that it deserves.

In that a phone call is a new type of experience for consumers to receive advertising, 'incubation' would also makes sense considering privacy concerns, correct?

Yes, privacy is the first and foremost concern at Microsoft All‑Up, and at Microsoft Advertising as well. We support and believe in it. We are not intending to do anything that is creepy or suspicious, because this is an intimate moment. We believe in authenticity, trust and not infringing on a consumer's privacy.

And that's part of the reason it is an incubation. We are going to make sure that we don't disrupt the most important part of the Skype experience, which is that call. Privacy is always number one here.

A Microsoft spokesperson clarifies that ads only show up for non‑paying customers.

What's available in terms of media placements within Skype today, and what’s in store for the future? Can you append data, or retarget through these placements?

Right now we have two placements, but there are different opportunities within the placements. The two large‑scale opportunities are, first, on Skype Home, and that's where people go and start their day. You chat initiate the chat from there. It has the standard  300 x 250 ad, and then there's the masthead ad, which is a larger experience.

We found those to be impactful and have been able to prove that those particular experiences drive sales, such as one day‑only sales.

We can [insert] a telephone number into those ads and drive sales of a product. For example, an electronic product where there was a 216 percent lift. In entertainment, we've had people engage with entertainment ads for more than two minutes. And, we've done some research for a CPG company that showed a six‑point lift in intent to buy from that masthead unit.

Then there are the conversation ads.  I am not ready to share where the other opportunities will be, but I will tell you that there will be some releasing in the coming months that will expand a number of different areas, including locations and other features and functionalities.

Regarding data and retargeting. We currently do not offer any targeting on Skype. And haven't made any announcement on when or if we'll do that.

How does a marketer buy all this? Do they buy direct from Microsoft's sales team? Is this available through an exchange?

Right now, they buy it directly through our Microsoft sales force, and it is sold either in one‑day takeovers or multi‑day takeovers. Some of the markets around the world sell share-of-voice opportunities. In the US, it's sold either as an impression buy or as a takeover. In the rest of the world, some of the Skype markets aren't as large, and so you have to sell maybe week‑long, or 50 percent of the week - we do a variety of things. But that's how people are buying it, through a hand‑sold model, and we are not leveraging our exchange or any other model right now for these units.

And so the reason there is no targeting is…?

We’re going to test and see what makes sense. I will tell you that that particular request is our number one most asked‑for product from our customers. We have to do it in a very careful way for all the reasons that we talked about earlier. Honestly, the audience has been able to sell itself without it. So, we are on track with our plan and haven't wavered from it, and we believe that the level of engagement is bringing back customers without that.

Can you share anything in terms of pricing for these placements?

We offer packages where we sell it with our MSN home page and other things. The nice thing about Skype's audience is it's complementary to our existing units, it's a younger audience. So one of the things we do is bundle it together to extend a marketer's reach.

Can you back that out to a CPM?

I don't think I'm going to share much about pricing in detail, but what I would tell you is it's priced competitively and it's not “low‑hanging fruit” pricing.  It's a unique opportunity and the engagement level is so high that you're not going to get it for cheap.

So, what type of advertising is it that you're offering for Skype? Do you consider it mobile, video, PC-based display? I’m curious how you position the channel.

That's a good question. It's something that I have spent a little time thinking about. Skype has all of those form factors, and currently you have mobile, you have PC - that's where we're selling advertising today.

We're not selling advertising in the other environments that Skype has. Over time - and I'm not Skype - Skype makes sense to go everywhere and be in multiple form factors. When we get down to designing what kind of ad experiences make sense, you have to consider the information architecture and what the consumer is doing within that product, and then you have to determine the design.

Skype has chat. There's audio - the majority of calls today are audio and not video, so that's a different kind of experience. There's video chat, which is another experience. Then last but not least, when you think about Group, you can see Group evolving to be just a call. You can see that going further over time, and so that might be another kind of engagement.

To really pin it as one experience is not possible. I wish it was. If we slapped the same ad in all of those consumer engagement points, we're going to do a bad job.

Getting that experience right, optimizing for the consumer first, and then the marketer second - we believe that we've now put this in the heart of where people love Skype. We want to be cautious, test, and learn.

By John Ebbert

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