Microsoft Tells Advertisers “Engagement” Is More Important Than Clicks, But Is Vague on Details

from TechCrunch by Erick Schonfeld

Online advertising executives love talking about “engagement”: It is not the impressions or clicks that count, it is how many people who saw your ad and actually ended up doing something about it. In a speech today Brian McAndrews, Microsoft’s senior vice president of Advertiser & Publisher Solutions, announced the beta of a new way to measure the effectiveness of ad campaigns that Microsoft is calling “Engagement Mapping.” Instead of measuring clicks or impressions, engagement mapping aims to track how many times a person comes across an ad on the Web, and correlate that to actions taken down the line. So if you see an ad on Facebook for a Visa card, and then on three other sites before you click through to sign up, Microsoft will give Facebook some credit for that eventual customer engagement.

In theory, it sounds good. We all know that clicks can be gamed. But at least clicks are a straightforward measure. Microsoft is vague about what exactly its unit of engagement will be—some combination of “the impact that recency, frequency, size and ad format (such as rich media and video) have on a consumer’s online path to action.”

It sounds complicated. Why not just measure the action you want the ad to trigger? Charging advertisers for engagement is certainly the right direction, but advertisers need to know what they are buying. In practice, measuring “engagement” may be nothing more than a way to justify the value of under-performing ads. “See, that Facebook ad actually worked—three weeks later.”

In the end, it doesn’t really matter what tortuous path a customer takes before deciding to buy something. Either Microsoft’s advertising platform will produce a better return on investment than the competition (Google) or it won’t. Advertisers won’t care how it does it. They will just care whether Microsoft’s ads measure up to Google’s.

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Microsoft Announces New Reporting Standard for Digital Campaign Performance: Engagement Mapping

New approach allows advertisers to map and assign value to various touch points, gaining a more complete picture of a campaign.

REDMOND, Wash. — Feb. 25, 2008 — Microsoft Corp. today announced Engagement Mapping, a new approach to managing and measuring the effectiveness of online campaigns that goes beyond the current “last ad clicked” standard. For the last decade, virtually all ad campaign reporting methodologies associate sales, leads and Web traffic simply to the last click or ad exposure. Engagement Mapping takes into account for the first time all the various online touchpoints and interactions a consumer experiences before an eventual sale.

Based on the Engagement Mapping concept, Microsoft announced the beta of Engagement ROI, an online campaign reporting and optimization solution that will undergo testing by national advertising clients and agencies, including Agência Click + UNICA, Best Western International Inc., BKV, Citi Cards, GSD&M Idea City, Ingenuity Media of The Martin Agency, Initiative, McKinney, MEC Interaction, Mindshare Interaction, Monster Worldwide Inc., Neo@Ogilvy, Sprint and World Vision. Engagement ROI evaluates and assigns measurable value to a consumer’s interaction with ads, giving advertisers and publishers a more complete picture of online behavior.

“The ‘last ad clicked’ is an outdated and flawed approach because it essentially ignores all prior interactions the consumer has with a marketer’s message,” said Brian McAndrews, senior vice president of the Advertiser & Publisher Solutions (APS) Division at Microsoft. “Our Engagement Mapping approach conveys how each ad exposure — whether display, rich media or search, seen multiple times on multiple sites and across many channels — influenced an eventual purchase. We believe it represents a quantum leap for advertisers and publishers who are seeking to maximize their online spends.”

Announcement of the Engagement ROI beta coincided with a keynote speech, “Advertising Ecosystem 2.0,” by McAndrews at the Interactive Advertising Bureau’s (IAB) Annual Meeting in Phoenix today.

The Engagement ROI is a fully integrated reporting capability within the Atlas Media Console currently available through Microsoft. Value is assigned and measured on a real-time basis and takes into account the impact that recency, frequency, size and ad format (such as rich media and video) have on a consumer’s online path to action. Engagement ROI is designed to allow advertisers and publishers to manage their campaigns with greater insight and control than previously available through third-party ad serving.

The beta officially begins on March 1, with results expected to be available before the end of the second calendar quarter.

Microsoft Helps You Reach Target Audience — Anywhere, Anytime

At Microsoft, we understand the intersection of the consumer and technology. Our advertising solutions can help you connect with consumers as they access different media at various points throughout the day — from PCs to games to mobile devices — and even more in the future.

Those interested can learn more about Microsoft’s diverse and effective advertising solutions — whether they are a small business or a Fortune 500 company.

About Microsoft Advertiser and Publisher Solutions

Microsoft Advertiser and Publisher Solutions (APS) provides world-class advertising platforms and tools for advertisers, agencies and publishers. Its mission is to make buying and selling media simpler, smarter and more cost-effective across media and devices in the Microsoft network of properties and beyond. The APS portfolio includes Microsoft adCenter, Atlas, DRIVEpm, Massive Inc. and ScreenTonic. APS businesses span search, display and emerging media including mobile, gaming, video on demand and IPTV. More information can be found at http://advertising.microsoft.com.

eMarketer on Microsoft-Facebook

OCTOBER 29, 2007

By Debra Aho Williamson and David Hallerman, Senior Analysts

When Microsoft Corp. paid $240 million for a 1.6% stake in Facebook last week, it acquired the rights to sell Facebook advertising around the world. With 34.5 billion page views in September, according to comScore Media Metrix, Facebook is now the fourth most highly trafficked Web property worldwide.

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Just how important is the international part of the equation? Facebook in September racked up 14.7 billion page views in the United States, comScore reported – just 43% of its worldwide total. Yes, the validity of the page-view metric is debatable, but for Microsoft’s sales organization, that is a flood of new inventory any way you look at it.

Monetizing that inventory is a question surrounding all social networking sites. How many of those page views of individual profiles and news feeds will attract advertisers, especially when measured against less risky options such as online video provided by established TV networks? While Microsoft may have a plethora of new inventory to sell against, it is worth asking whether the sales will be much more than low-CPM banners.

The good news is that consumers around the world are embracing social networking. According to Datamonitor, 75% of worldwide social networking members come from outside of North America.

Social networking penetration is already quite significant in Europe. In August, 78% of UK Internet users ages 15+ visited a social networking site, according to comScore. Half of German and French Internet users did as well.

Although Facebook is growing rapidly in many international markets, it will compete against MySpace and homegrown social networks such as France’s Skyblog.

Confirming the importance of the non-US market to social networking sites, MySpace CEO Chris DeWolfe told Bloomberg this month that the company will operate in 30 countries next year (from 23 currently) and could generate half its sales from outside the US by 2012.

So, as the quest for social network ad dollars continues to ratchet upward, the international market is looking more and more likely to be the source of the biggest revenue growth.

Microsoft Works Goes Free, Ad-Supported

By JESSICA MINTZ

The Associated Press
Thursday, August 2, 2007; 4:14 PM

SEATTLE -- Microsoft Corp. will test a free, advertising-supported version of Works, an already inexpensive package of word processing, spreadsheet and other programs, but would not say whether it is exploring a similar Web-based suite.

The company said Wednesday that a limited number of computer makers will pre-install Microsoft Works 9 SE on new PCs in certain markets, and that the test of the business model will last about a year.

Microsoft's announcement comes a week after its top executives sketched out a strategy for supplementing traditional packaged software revenue with subscriptions and Web-based services, during a day of meetings with financial analysts at its Redmond, Wash., headquarters.

Industry watchers have been parsing those speeches for signs the company will develop an online version of the more expensive Office suite to compete with free offerings from Google Inc., but the company has so far been silent on the issue.

In an interview Thursday, Melissa Stern, a senior product manager at Microsoft, said the ad-supported programs address requests by customers for free productivity software and concerns from PC makers about rising costs.

The display ads will appear in the lower corners of the screen while users work on spreadsheets, calendar appointments and other documents. The suite will come pre-loaded with ads, and new ones will download when users' computers connect to the Internet.

Advertisers can buy space inside of Works the same way they plan online advertising campaigns on Microsoft's Web sites.

The ads, which Stern says are "not intrusive," will be targeted based on what Microsoft knows about Works users' demographics, and will relate to common tasks like household budgeting and vacation planning.

Users of the free Works suite will be able to click from inside the program to upgrade to the $40, ad-free version of Works 9, or download a free trial version of Office 2007, which costs from $149 to $679.

Ballmer: We are 'hell-bent' on succeeding in ads

By Martin LaMonica

http://news.com.com/Ballmer+We+are+hell-bent+on+succeeding+in+ads/2100-1012_3-6199030.html

Story last modified Thu Jul 26 12:13:02 PDT 2007

Hefty investments in online services and consumer electronics will let Microsoft maintain its historically rapid growth rate, CEO Steve Ballmer told financial analysts on Thursday.

The largest software company is hosting its Financial Analysts Day at its Redmond, Wash., headquarters, where Ballmer described Microsoft's strategy as making several big bets on emerging businesses while drawing more revenue from its mature desktop and server software franchises.

Microsoft is transforming its product development and business models around "software plus services," or software complemented with online services, he said. The company has been criticized by financial analysts for being slow to capitalize on advertising revenue as search giant Google has done.

"We are hell-bent and determined to allocate the talent, the resources, the money, the innovation to absolutely become a powerhouse in the ad business," Ballmer said.

Company founder Bill Gates, who made a presentation before Ballmer, announced that Microsoft is opening a dedicated center to research online advertising and search called the Internet Services Research Center. Headed by Harry Shum, the center's research will focus on search relevance, spam prevention and searching scanned images, such as book pages.

Ballmer said that the company is tackling disruptive technology changes head-on, namely the shift to advertising-supported Web services. Its commitment to online services and consumer devices are necessary because they provide avenues for the company's software.

He defended continued investments in two unprofitable divisions: Online Services and its Entertainment and Devices division. Microsoft's multiyear commitment in server software for corporate data centers diversified the company and created a multibillion dollar revenue engine.

"We're bringing the same kind of vision and tenacity that is in our DNA that drove us into the enterprise business into consumer devices and online services," Ballmer said. "We are going to be an advertising company, and we are going to be a devices company."

Even coming off a strong fiscal 2007 performance, Ballmer said he has "never been more optimistic" about Microsoft's prospects, outlining areas for more revenue. Those included stepped-up sales of Windows through PC manufacturers, Xbox game consoles, Windows Mobile phone software, increased market share of server software, office worker productivity software for small and medium-size businesses and advertising from online services.

Giving some upbeat reports on its mature business, Microsoft said it has sold 60 million copies of Windows Vista since its launch earlier this year and that its SharePoint Web portal business has grown to $800 million. Ballmer said that by the end of its fiscal year 2008, there will be over 1 billion copies of Windows installed on PCs.

Furthering its strategy to court Web developers and designers, Microsoft said that by the end of the week it will release Silverlight 1.0 Release Candidate. Silverlight is a download for displaying media and interactive content in Web pages. It competes with Flash and other plug-ins that add interactivity to Web sites.

During Gates' presentation, he described Microsoft's vision for improving users' computing experience with online services; better user interface technology, such as speech and cameras; and a smooth transition among handheld devices, PCs and other devices.

He said that broadband is allowing Microsoft engineers to reconsider the computing paradigm, where resources typically confined to a single machine, like storage, can be done in the Internet "cloud."

Microsoft is building a platform for that new computing paradigm with Chief Software Architect Ray Ozzie "driving the revolutionary new platform that is service centric," Gates said.

Quantifying Microsoft's biggest purchase ever

By Elinor Mills
http://news.com.com/Quantifying+Microsofts+biggest+purchase+ever/2100-1030_3-6184974.html

Story last modified Fri May 18 14:00:45 PDT 2007

Aquantive who? The company Microsoft is acquiring for its highest purchase price ever may not even register on the radar of most consumers.

But it's a well-known entity in the online advertising industry and can give Microsoft some much-needed--even if pricey--ad-serving technology, some industry experts said.

Microsoft said it was buying Aquantive early on Friday, shocking many observers with a $6 billion purchase price, which is three times the amount it has paid for any other company and an 85 percent premium on Aquantive's closing stock price on Thursday. It is also double what Google agreed to pay for DoubleClick last month. Aquantive's stock rose nearly 80 percent after the deal was announced.

"That's a heck of a premium," said Charles Moldow, a general partner at Foundation Capital and a former mergers and acquisitions banker at Merrill Lynch. Maybe "they feel like they want to complement their current (ad) traffic and feel like they can bring these capabilities to the market and this is the only way in their mind to do it--in a fast way. Otherwise I don't see the urgency."

There has been a recent buying frenzy in the online advertising sector as companies try to grab bigger pieces of the lucrative market that is expected to continue to grow as more people turn to the Web for their entertainment and information. After Google said it was buying DoubleClick, Yahoo announced it was snapping up online ad exchange company Right Media for $680 million. Earlier this week, WPP Group said it would buy ad-serving company 24/7 Real Media for $649 million. Microsoft had been rumored to be in talks to buy 24/7 Real Media, too.

"Clearly there was a sense of scarcity value," Moldow said. "Sometimes it's good to be the last independent guy standing."

Randy Haykin, managing director at Outlook Ventures, said Microsoft's Aquantive purchase was a "defensive maneuver" in a consolidation wave that started when AOL bought online ad network Advertising.com three years ago for $435 million.

"Who would have guessed years ago that this sort of 'vertical consolidation' would occur between the search/portal players and the ad networks," he said. "I believe that Google's domination of the advertising market has prompted this concoction."

Aquantive is based in Seattle, not far from Microsoft's Redmond, Wash., headquarters. It is a holding company with properties that include the Atlas Media Console ad buying and management tool; Drive Performance Media, which buys and resells online ads targeted to user behavior; and Avenue A Razorfish, a creative agency and ad broker for clients that include McDonald's, Nike and Microsoft.

"Aquantive is a very significant player in the online advertising arena. It's one of, if not the largest buyer of digital media," said Derek Brown, an analyst at Cantor Fitzgerald.

The Atlas Media Console allows advertisers to buy and manage advertising campaigns on Web sites. It "provides Microsoft with a toehold into advertising done across the entire Web, including on Google, Yahoo and Microsoft and many other sites, an ability Microsoft has not historically had," Brown said. Plus, "it's a new revenue stream."

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Microsoft to buy Aquantive for $6 billion

Redmond shells out for Aquantive in the latest big-bucks maneuver in online advertising.

The online advertising market is $40 billion globally now and is expected to grow at least 20 percent each year for the next few years, said Kevin Johnson, Microsoft's platform and services unit head.

"We are deeply committed to building a great advertising business. This investment in the monetization capability for our future services is key," he said. "As a company, we've made a strategic bet that we are going to shift more and more things to this concept of software plus service, where we complement our software offerings that run on intelligent devices on the edge of the network with services delivered over the network. Many of those services will be monetized through online advertising."

Like other online ad consolidations, Microsoft faces challenges if it wants to avoid a conflict of interest, said Tim Hanlon, a senior vice president at Denuo, a consulting arm of advertising agency Publicis Groupe. The proposed Microsoft-Aquantive deal would bring together under one roof a media agency that buys ad spaces on behalf of advertisers, an ad-serving technology provider and a seller of inventory in MSN, which will result in the buying and selling of ad inventory from within the same company, he said.

"If I'm a marketer I have to be very careful how I choose my agencies because some of them now may come to the table with institutional or internal biases about particular software, hardware or technologies because they are part of the same company," Hanlon said. "It remains to be seen what stays in the company and what maybe gets spun out and sold because of these conflicts."

Microsoft to buy Web ad firm aQuantive for $6 bln

Published: Friday, May 18, 2007

By Eric Auchard

NEW YORK (Reuters) - Microsoft Corp. said on Friday it would buy aQuantive Inc. for about $6 billion, or $66.50 a share, an 85 percent premium to the online advertising company's closing price on Thursday.

Shares of aQuantive shot to $63.95 in pre-opening trade, following news of the deal.

The all-cash deal tops a dramatic one-month consolidation spree across the online advertising market sparked when Google Inc. agreed to buy DoubleClick for $3.1 billion.

Yahoo Inc. followed by snatching up the 80 percent of Right Media it did not already own in a deal valued at $680 million. This week, WPP Group said it would acquire 24/7 Real Media Inc. for $649 million. Ahead of the wave, French advertising giant Publicis bought online ad agency Digitas in December for $1.3 billion.

Microsoft of Redmond, Washington said it would acquire aQuantive, based in nearby Seattle, to expand its push into Internet advertising through aQuantive's tools for managing the buying and selling of online ads.

Shares of aQuantive closed at $35.87 on Thursday on the Nasdaq. ValueClick, the last sizable independent player in the online advertising market saw its shares jump as much as 12.5 percent in premarket trade to $31.36 from $27.88.

AQuantive helps advertisers target online ads through its Atlas technology unit and offers Web-site development services through its design agency Avenue A/Razorfish. It also operates an online advertising network that connects buyers and sellers and provides behavioral targeting for advertisers of Web site users.

Microsoft said the deal would allow it to strengthen ties with advertisers, ad agencies and Web site publishers by enhancing the underlying mix of software and services its MSN consumer Internet business unit can deliver.

The acquisition also provides Microsoft increased depth in building a new generation of advertising in markets such as video-on-demand and Internet Protocol Television, as well as cross-platform ad delivery, which bridges traditional and new media formats.

MSFT buys AQNT for $6BN

NEW YORK (Reuters) - Microsoft Corp. (MSFT.O: Quote, Profile, Research said on Friday it would buy aQuantive Inc. (AQNT.O: Quote, Profile, Research for about $6 billion, or $66.50 a share in cash, which represents an 85 percent premium to the online advertising company's closing price on Thursday.

The deal caps a one-month consolidation spree across the online advertising market sparked when Google Inc. (GOOG.O: Quote, Profile, Research agreed to buy DoubleClick for $3.1 billion, Yahoo Inc. (YHOO.O: Quote , Profile, Research snatched up Right Media and WPP Group (WPP.L: Quote, Profile, Research purchased 24/7 Real Media Inc. (TFSM.O: Quote, Profile, Research.

Microsoft of Redmond, Washington said it would acquire aQuantive based in nearby Seattle to expand the software giant's push into Internet advertising through its tools for managing the buying and selling of online ads.

Aquantive shares closed at $35.87 on Thursday on Nasdaq.

Gates makes case for Microsoft's ad business

http://news.com.com/Gates+makes+case+for+Microsofts+ad+business/2100-1014_3-6182120.html

Story last modified Wed May 09 06:04:38 PDT 2007

SEATTLE--While Microsoft may face some challenges taking advantage of the shift to Internet advertising, it's in good company.

Television, newspapers and all forms of publishing are being fundamentally changed by a shift to digital media, Bill Gates said Tuesday as Microsoft kicked off a conference for large online advertisers.

"Yellow Page(s) usage among people below 50 will drop to near zero in the next five years," Gates told a crowd of more than 1,000 people from the advertising, publishing and tech industries at the company's Strategic Account Summit.

TV is similarly being overhauled, as broadcast media suddenly have to compete with videos of high school games and short clips posted to YouTube. Newspapers are moving to digital forums but finding plenty of competition for things like the job classifieds that were once their exclusive domain.

Gates said he has a lot of friends in the newspaper business, but added there is also an "inexorable decline" in the use of newspapers to get news, even local news. "This is a tough, wrenching change for them," Gates said.

Microsoft, too, has found plenty of competition. But Gates and other Microsoft executives are trying to make the case that they are still in the game, despite missing out on recent, key deals and struggling to make a dent in the search market.

Kevin Johnson, head of Microsoft's Windows and advertising businesses, sent an e-mail to conference attendees on Monday reassuring them that the software giant is in the ad game for the long haul.

"Some of you have asked if we remain as committed following the announcement of Google's proposed acquisition of DoubleClick," Johnson wrote. "Many of you have also expressed your concerns about the impact that such an acquisition will have on the online advertising landscape. While we share your concerns, we maintain our sharp focus on this industry, and we will continue to invest heavily in innovation and partnerships in this area."

While Microsoft is working to catch up to Google in areas such as search, it is also looking to technology to provide new types of Internet content and advertising that it hopes will change the rules of the game.

"To think about this as the endgame is quite silly," said Gary Flake, the former Yahoo executive who heads up Microsoft's Live Labs, which tests out new ideas in Internet content and advertising.

Microsoft showed how its Seadragon technology for scrolling large images could pave the way for a new type of advertising in which a small ad could actually contain an entire brochure or product catalog. While the average browser would see just the small ad, an interested potential buyer could zoom in for more detailed photos and even detailed product specifications. Internally, Microsoft is calling that an "infinite zoom ad," Flake said.

"It's pretty mind-boggling," Flake said in an interview. "The idea that you can have a finite piece of real estate, a fixed area that can be explored and expanded...now what is an advertisement can actually have as much information as a product catalog."

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Such ads could also be less obtrusive. "It can be surfaced in a way that doesn't bother the user," Flake said. "It's actually great for the user because they only see it if they choose to dive into it."

That said, the ad business would have to shift some to adapt to a different kind of ad. "The click doesn't happen. There is no cost per click. We need something different...pay per zoom or pay per attention," he said.

In a talk later Tuesday, Flake also plans to show a potential ad use for another Microsoft photo technology, PhotoSynth, which creates 3D images out of collections of digital photos of the same space. In the past, Microsoft has demoed the software to allow people to move around tourist spots and landmarks. But, Flake said, the technology could also be used to replicate storefronts.

"We kind of jokingly call it 'One and a Half Life," Flake said, a reference to an experience in between today's Web and the Second Life virtual world.

Flake said he has talked to a lot of partners who want something more immersive than current e-commerce options, but aren't sure Second Life is really a viable e-commerce option. "A lot of them have such conflicted emotions about building a Second Life storefront," Flake said. "They kind of want to do it because it's maybe a cool thing to do. They have no expectations or aspirations that it will make any money."

MSFT looking at Yahoo

The NY Post has the exclusive story this morning: Microsoft has once again approached Yahoo!, asking the Sunnyvale based search portal and content destination to come to the table and negotiate a friendly takeover by Microsoft.
BILL'S HARD DRIVE By PETER LAURIA and ZACHERY KOUWE - Business - New York Post Online Edition

Microsoft Eyes Yahoo purchase

May 4, 2007 -- Stung by the loss of Internet advertising firm DoubleClick to Google last month, Microsoft has intensified its pursuit of a deal with Yahoo!, asking the company to re-enter formal negotiations, The Post has learned.

While Microsoft and Yahoo! have held informal deal talks over the years, sources say the latest approach signals an urgency on Microsoft's part that has up until now been lacking.

The new approach follows an offer Microsoft made to acquire Yahoo! a few months ago, sources said. But Yahoo! spurned the advances of the Redmond, Wash.-based software giant. Wall Street sources put a roughly $50 billion price tag on Yahoo!.

"They're getting tired of being left at the altar," said one banking source who has recently had talks with Microsoft. "They now seem more willing to extend themselves via a transaction to get into the game."

Part of the reason for that is because Google keeps trumping Microsoft on the deal front, beating out the company on not just DoubleClick, but also for a renewed search advertising pact with AOL in 2005 that Microsoft lusted after.

Moreover, with Google developing Internet-based software that directly competes with Microsoft Office, sources said Microsoft has no choice but to go on the offensive.

"The minute you hear Microsoft start arguing against something on antitrust grounds, you know they are desperate and need to do something big," said one source.

Sources said Microsoft is working with Goldman Sachs.

News of Microsoft's latest approach comes as Yahoo!'s new search advertising platform Project Panama is just getting off the ground.

The long-awaited platform posted disappointing first-quarter results, but sources said that was more a function of difficult comparisons to the year-earlier period and less a sign that the system wasn't working. That said, another quarter or two of similar results and investors might begin renewing calls for a sale or for CEO Terry Semel to step down.

As it stands now, a deal between Microsoft and Yahoo! would up the combined companies' share of the all-important search advertising market to 27 percent against Google's 65 percent. It would also narrow the gap in overall online ads with Google to just 13 percent.

More importantly, a deal would create what one source described as "the dominant force on the Internet" in terms of eyeballs. That's an important consideration as more and more content flows online - as the equations goes, eyeballs equal advertising.

Microsoft and Yahoo! also feature complimentary offerings on the content side, with MSN drawing an older audience with its news focus. By contrast, Yahoo! attracts a younger demographic with its entertainment coverage.

Aside from cost savings, a deal would also create opportunities to use Yahoo! content on Microsoft devices, such as making music exclusively provided to Yahoo! Music available on Microsoft's Xbox game console and Zune music player.

A spokeswoman for Yahoo! declined comment. Microsoft declined comment. peter.lauria@nypost.com