Microsoft: Let Online Ad Market Evolve

May 21, 2007  •  Post A Comment

You’re in a Microsoft Windows Live search-results page after querying “Land Rover,” you mouse over an icon next to the sponsored results and suddenly you’re careening into what in the offline world would be called a glossy print ad or a detailed brochure.

Want to see the fine print? Just scroll in deeper. Want to see what radio station the car’s audio system is tuned to? Zoom in infinitely until you can read the tiny call letters on the stereo display. This technology is called Seadragon, and it will allow advertisers to push tons of extra data and images to searchers, a big improvement over today’s unsophisticated text ads.

Adding rich navigable images to search results is one of the ideas pitched recently at Microsoft’s advertising gathering in Seattle to a crowd that included such varied players as Federated Media’s John Battelle, GroupM’s Irwin Gotlieb, Publicis Media’s Jack Klues, and Julie Roehm and Sean Womack, who have launched a consulting company in the wake of their infamous Wal-Mart exit. (DraftFCB’s Howard Draft presented.)

What’s more, it’s an example of what people mean when they talk about search being in its infancy-and it’s exactly how Microsoft wanted its biggest marketer clients to think about the software company’s position in the online advertising space. As Microsoft CEO Steve Ballmer has been known to say, the online ad game is a marathon, not a sprint. (More cynical watchers note that has been its refrain for several years.)

Microsoft Technical Fellow Gary Flake said, “I’m going to make the modest claim that despite all the hype that’s been somewhat omnipresent over the last few years, we’re still fundamentally undervaluing the total proposition [the Internet] represents to society and all the industries that connect to it.”

Future-casting was omnipresent at the event and Mr. Flake, whose talk harkened back to a university lecture hall, suggested that components like the Long Tail, Web search and network effects were overhyped as individual entities. But combined they can create profound, and undervalued, changes in the way information is presented and discovered.

One of his had-to-see-it-in-person examples of that was a Microsoft-developed technology called PhotoSynth: Multiple users can upload their photos of a location and the images are pieced together automatically and algorithmically into a 3-D model of the locale. He showed one potential ad application of the technology-a virtual 3-D showroom married to traditional Web content.

Mr. Gates sprinkled his speech with his own predictions, including the extinction of Yellow Pages, doubling the PC installed base of 1 billion and newspaper reading going completely online.

“The only drawbacks of digital form are things associated with the device,” he said, including how big or heavy is it and how many hours of memory it can handle. “Once you achieve that threshold in terms of convenience and cost, you see a dramatic change in behavior.”

Mr. Gates also spoke about one of his biggest bets: IPTV. Microsoft’s IPTV software is installed on set-top boxes from makers including Cisco, Scientific-Atlanta and Motorola as well as Microsoft’s own Xbox.

“The Internet’s like a lot of things,” Mr. Gates said. “The only sure winners are the consumers themselves.”

That might be true, but a few buyers were beginning to wonder when Microsoft might stop talking about the three- to five-year view and offer real details on how the company intends to move from third place. And the Summit-which unlike last year’s news-filled confab was short on news but high on concept-reinforced that thinking.

“They were focused so beyond the current state of search,” said Kevin Lee, chairman of Did-It Search Marketing. “To some extent you expect that, because they’re No. 3, but some of the foundation they were laying, if they can execute, could be pretty compelling.”

He was particularly intrigued by the ability to follow people across the Xbox, Live applications, MSN and mobile. When you search, he said, you have just a slice of the information-what that particular searcher was interested in at that moment of time.

Some attendees privately critiqued the event’s programming, suggesting they might have liked to see more content applicable to marketers, rather than Howard Draft, who gave a pitch for his DraftFCB, complete with a demonstration of his wall of data, or the heavy emphasis on cause marketing. In the end, it was valuable for what these things tend to be: a gathering of minds that provides good networking opportunities.

The event closed with Yahoo CEO Terry Semel, an appearance that fueled last week’s speculation of a tie-up between Yahoo and Microsoft.

He called for the demise of digital bundling at the TV upfront, explaining that marketers will be looking for the best stuff online, not necessarily what comes bundled with a TV buy. “Wisdom will prevail,” he told the advertiser audience. “The people spending money and doing the buying will say, `Excuse me, I know what audience I’m looking for and you don’t have the statistics, data, reach and demo that I want and frankly you’re small.’ At end of day, it’s a temporary scenario.”


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