The Next Microsoft CEO Is

ad-stackWith Microsoft CEO Steve Ballmer planning to retire inside of a year, the question from an ad tech perspective is: could Microsoft return to an ad stack strategy with a new CEO? And if so, who would it be?

Today, Microsoft’s ad tech/stack strategy largely consists of an hypnotic focus on search advertising through Bing, its Ads in Apps for Windows 8 initiative and its strategic investment in real-time ad platform AppNexus, as well as ongoing efforts on the publisher side of things. This includes the sale – both direct and indirect – of display inventory from Microsoft owned-and-operated properties such as Hotmail, Outlook and others.

In fact, there seems plenty of room to run for the Microsoft ad stack. But, under CEO Steve Ballmer, Microsoft (kinda) tried and lost with the “stack.”

As faithful readers recall, in April of 2007, Google had just bought DoubleClick with its early ad exchange efforts, and then Yahoo followed suit by acquiring the rest of Right Media and its nascent exchange. Three weeks later, Microsoft plodded in with a $6.3 billion acquisition of Aquantive which included its Atlas ad serving system, and then purchased the tiny ad exchange AdECN in July of that year. Fast forward to earlier this year when Facebook bought what remains of Atlas – in what seemed like a face-saving strategic deal for Microsoft. And, AdECN .. well, that was closed in 2010 with former employees spread across the ad ecosystem.

Hmmm, so maybe the the ad tech stack wounds still need to heal while the ecosystem pines for another credible competitor to Google?

Even without a new CEO, one could say that AppNexus IS the seeds of the stack strategy. For example, with its 2010 and follow-on investments, it is rumored that Microsoft owns certain rights of refusal (of course it wields billions in cash, too) before AppNexus can change hands. Also, the AppNexus-Microsoft relationship today echoes Microsoft’s successful acquisition of Skype, where Skype has not been integrated into the company as Aquantive and AdECN unsuccessfully were.


The Insider

Sources and news outlets say the top internal candidate for CEO is Tony Bates, whose successful, protective stewardship of Skype while its president has empowered him in Microsoft’s executive ranks and among Wall Street analysts looking for bold, new steps.

Would Bates want Microsoft to have an ad tech stack strategy? I’d say he’d want it “as is” until programmatic media becomes a driving revenue force at Skype as well as other owned-and-operated properties, which is possible in time. Microsoft still makes tons of cash on PC software, but the well-documented need to diversify revenue streams is drawing nigh.

Of course, that’s too bad for AppNexus investors in the near term, who’d love some deep pockets to come along. That said, ad tech is increasingly becoming a long game in spite of recent mergers, acquisitions, dissolutions and IPOs.

The Outsider

Beyond the internal candidate, Microsoft could have a Marissa Mayer moment where someone new and out-of-the-blue comes in to re-invigorate, if not clean house. An entrepreneurial CEO could be ready to roll some dice toward ad tech as Aol’s Tim Armstrong has done.

[Insert the immortal voice of Caddyshack’s Carl Spackler here]

And there it is.. the pattern, the tea leaves I was looking for…

Former Googler to Aol. Former Googler to Yahoo. And former Googler to…

I’ll guess Google SVP and Chief Business Officer Nikesh Arora will be the next CEO of Microsoft!

[end Spackler]

When an executive takes a job like Aol, Yahoo or Microsoft, it is to take the ultimate CEO challenge. Reinvent the corporate beast and create business history. Arora has the ego for it. If he takes over, the ad stack strategy is doused with fuel oil.

Enjoy your coffee.

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