Microsoft Preps New Ad Units for Windows 8 OS Launch

Microsoft is preparing to woo digital marketers and agencies with a set of new ad units tied to the release of the Windows 8 OS next month.

Rik van der Kooi,  corporate VP of the Microsoft Advertising Business Group, tells AdExchanger the new formats — Microsoft prefers to call them “experiences” — will be released during New York City’s Advertising Week. In addition to promising new levels of creativity and interactivity, Microsoft is pitching them as a seamless web/tablet/mobile offering.

In addition, the ads are designed to extend the reach of marketers across Microsoft’s owned-and-operated properties to its Xbox Live entertainment hub, which is the closest option online marketers have to achieving unbroken, mass contact with users across multiple screens by dint of the 40 million members who use the service.

“In introducing ads to the latest Windows 8 device, we’re going to have our own apps on the home screen that bear a clear resemblance to magazines on a newsstand,” van der Kooi said. “The apps will be organized within specific verticals like sports, news, travel, finance or entertainment. It’s very similar to the way that Flipboard can be viewed according to sections. That clarity will appeal to users, and in turn, we believe that it will help advertisers reach the right audience as well.”

Microsoft of course faces significant challenges. Primary among them is the ascendance of Google and Facebook on top of the display advertising pyramid, displacing some of the perceived value of Microsoft and its portal brethren, Yahoo and AOL.

“Microsoft is in a state of transition, as portals don’t have the prominence they once had,” said Jeff Lanctot, global chief media officer for Razorfish, the digital ad shop briefly sold by Microsoft to Publicis in 2009. Lanctot, who also held a post at Microsoft before returning to Razorfish last year, told AdExchanger that Microsoft is “in a good position to manage through that transition and re-establish themselves, in a new way. Their multi-screen offering is strong, with Xbox a consistently strong option. Skype’s ad model is nascent, but there is reason for optimism. And Windows 8 is a chance for Microsoft to introduce new and creative opportunities for marketers.”

Van der Kooi wouldn’t say how many seamless PC/mobile ad units will be released next week, but he did say that Microsoft has worked closely with six creative agencies on beta testing the units, which he compared to AOL’s large Project Devil ads. In keeping with the idea underlying the portal alliance struck last year between Microsoft, Yahoo and AOL, van der Kooi said that the Redmond software giant will be open to using the Interactive Advertising Bureau’s “Rising Star” ad units, which include Project Devil formats.

“By using standard ad units in addition to our custom formats, the goal is to make it easier for advertisers to extend their campaigns to us,” van der Kooi said. “The web is not a closed place. That’s the idea behind IE’s Do Not Track stance. We want to create customer choice for both consumers and advertisers. Deeper customer relationships come from deeper transparency. And in advertising, if you want someone to do business with you, you have to build trust. This is one way we think we can start building that trust across the board. That doesn’t mean that there are not hurdles to overcome.”

To be sure, some creatives remain dubious about the idea of simply making ads that are larger and interactive. “I think improving display is rearranging the proverbial deck chairs,” said Marc Lucas, a former digital creative head at Razorfish and Kirshenbaum Bond Senecal + Partners and currently the head of his own digital shop LU©AS & Co. “The internet was designed by the military to route information around noise. Anything that blocks the signal is routed around, and advertising as an intrusive interruptive brand experience is, by definition, noise. The internet is spectacularly good at filtering that noise out. Which makes interruptive or disruptive advertising less and less viable.”

While those are larger issues for the industry to sort out, for the moment, some interactive ad executives think that Microsoft’s embrace of a bigger, more interactive set of ads, whether customized or from a third party, will ultimately help drive ad revenues.

For example, Dave Martin, SVP for media at Ignited, told us that although Facebook and Google are battling it out for a larger share of the display pie, there is still a lot of value in the portals.

“The portals are in a position to offer a lot more than impressions and clicks,” Martin said.  “The flexibility to build out larger units like the Rising Stars and the Devil formats is something that can’t be found at scale on most of Google’s, and all of Facebook’s, display inventory.  Large ads that deliver more than just impressions and clicks simply can’t be found on most ad networks or on Facebook.  The more advertisers start to evaluate…how well their campaigns impacted attitudinal metrics, the less they will spend on CPC campaigns with Google and Facebook.  The portals also have the ability to create deeper integrations with their content which will be a big growth area for marketing as consumers opt out of more formats of interruptive advertising.”

Matthew Fanelli, VP of digital at Time Inc.’s Media Networks Inc., echoed Martin’s view of the opportunities and challenges to Microsoft and the portals amid a changing display landscape. However, he does wonder if the portals have relied too much on their reach the past few years — and not enough on generating the kind of quality content that will ultimately bring in brand dollars, especially considering the rise of audience buying.

“The reason is that even as they have each been able to claim the ability to reach around 90 percent of the internet audience, the question remains: how much of that audience is really engaged with those brands?” Fanelli said. “The only way they can suitably get that important engagement is with premium content. Getting engaging ad units— ones that can be better targeted to users, and that contain content that they are likely to have some affinity with—  is the other part of that evolution that needs to take place.”

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