Microsoft to push MSN into black with $30 m

By : |September 28, 2001 0



LONDON: Microsoft is investing $30 million over the next 12 months to woo
advertisers to its MSN portal, the company said on Thursday. The money has been
allocated for MSN’s business units in Europe, the Middle East and Africa, and is
part of a larger $100 million initiative to attract advertisers to its portals
around the world, Microsoft said.

Over the past 18 months, Microsoft has invested $250 million in promoting and
building up the MSN portal, the company said. The results are starting to pay
off. Last November, MSN overtook Yahoo as the largest portal in Europe. It had
28 million monthly visitors in August, according to JupiterMMXI. Now, Microsoft
wants to assert its lead to draw in more advertisers to push the portal into the
black.

                                 

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Troubled online Ad market

Microsoft’s announcement comes at a rough time. Advertisers are skimping on
ad campaigns in the wake of a slumping global economy and the threat of a US-led
"war on terrorism." Online advertising has been hit particularly bad.
Online ad expenditure forecasts for Europe have been reduced on multiple
occasions this year as advertisers continue to question the medium’s
effectiveness.

Merrill Lynch recently stated that it expects online advertising in Europe to
grow by 24 per cent this year. In early 2001, other industry forecasters had
stated that year-on-year growth rate for Europe would be three to four times
that rate. Microsoft expects the downturn in online advertising will result in
further consolidation of the once high-flying portal sector, putting further
pressure on the top sites to attract the dwindling ad revenues to stay alive.

"There is a lot of money still being spent by the more traditional
advertisers," Sharon Baylay, European, Middle East and Africa marketing
director for MSN told Reuters. "I’m not seeing as much online as I’d like.
Our challenge with this new programme is to help show what this new medium can
offer."

The online ad market has been damaged in part because Web sites have done a
poor job explaining to larger advertisers the most cost-effective way to use the
medium, a London-based Internet analyst told Reuters on Thursday. But, the
analyst said, Microsoft’s influence could change that. "Anything that makes
online advertising more legitimate and more accepted is going to benefit
everybody," he said. "And I think Microsoft is in as good a position
as anybody to do this."

Microsoft has introduced a raft of new online advertising formats. In
addition to the staid banners and button-shaped ads, MSN will now begin selling
full-page ads that that appear while a Web page is being downloaded. After a few
seconds it shrinks to a fraction of the size so a reader can view the intended
Web page.

Another new ad format is called "the scratch-off ad." Akin to a
scratch-off lottery ticket, the ad message is revealed by having the mouse
cursor scrape along the banner. The scratch off ad is priced at 35 pounds
($51.64) per thousand page impressions (CPM), a steep increase over the standard
banner ad, priced at 13 pounds CPM, according to the rates published on MSN’s
Web site.

As part of the $30 million investment, Microsoft has expanded its online ad
sales force to 150 from roughly 40, and has hired Chris Dobson, a veteran of ad
buying firm Zenith Media, as its European sales director. Dobson’s team will
work on forging stronger ties with ad agencies across the region to attract new
business.

Microsoft also introduced a new ad-targeting product, akin to DoubleClick’s
DART product, which can point ads at consumers based on their tastes and
preferences.

"This is something we’ve been working hard on," Baylay said of the
new ad-targeting product. "It’s something we need to be able to compete
with DoubleClick on."

(C) Reuters Limited 2001.

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