Microsoft plans to double its presence in advertising

It seems that Microsoft has decided what its next big venture in the giant company will be. Satya Nadella’s company wants to double its ad revenue and that would take them up to 20 billion in revenue. If Microsoft manages to achieve this goal, it would become the sixth largest digital ad provider in the world, overtaking Tencent according to estimates. Rob Wilk, head of Microsoft’s advertising division, said: “We think we deserve our moment in the sun and we’re getting it”.

Advertising at Microsoft: from sales to giant

That could be an indication that the company is in a better position compared to 2015, when Wilk was considering whether or not to join the company. At the time, Microsoft had just sold its Atlas ad server to Facebook (now Meta) and outsourced its display advertising to AOL. This led Wilk to believe that the company was not ready to fully enter the advertising business.

Flash forward to more recent times, Wilk now heads the advertising division, which has improved remarkably, especially since the acquisition of AT&T’s advertising unit, Xandr, which was closely followed by its partnership with Microsoft. , which revolved around a Microsoft-supported advertising tier. support. .

Matt Prohaska, an advertising consultant, points out that Microsoft could eventually become a global advertising player. “the size of the big four”. This is despite the fact that it is currently facing tough economic times and, at the same time, stiff competition from companies like TikTok and Apple.

What will it take for Microsoft to achieve this goal? Bing search, Xbox, MSN and hundreds of other sites are among Microsoft’s advertising properties that use Xandr to sell digital ads. According to ad buyers, Microsoft needs to consolidate all its properties into a single point of contact, which in turn makes it easy for them to access them.

Furthermore, they added that Microsoft needs to differentiate itself from competitors, especially those that interact with similar features but have “more mature advertising companies” like google. However, Wilk countered, saying the company was partner-focused over Google.

Microsoft’s smart partnership with Netflix

However, ad industry observers have indicated that Microsoft’s involvement with Netflix has given it an advantage and is a step in the right direction in terms of differentiation. Netflix began rolling out its new level of ad support in November, which now allows advertisers to buy ads through Xandr. This indicates that Microsoft will get a reduction in reseller fees. Tom Triscari, programmatic economist at Lemonade Projects, added that “It doesn’t take much for Netflix to generate $10 billion in ad sales. The right deal is rare and highly valued.

There are doubts about the sustainability of this fact and whether Netflix will maintain the partnership with Microsoft in the long term. A credible source familiar with the partnership said it was short-lived. Netflix’s hiring of advertising executives Jeremi Gorman and Peter Naylor may be an indication that Netflix may be cutting ties with Microsoft in the long term. Wilk declined to comment on the length of the contract, saying only that “It is not 10 years, but more than two. »

Activision-Blizzard, another door to advertising

Another avenue ad buyers believe Microsoft could use to achieve this would be games. Although the deal with Activision Blizzard is still ongoing, in-game advertising can launch the game, especially if those ads can only be purchased through Xandr.

It seems that Microsoft does not want to get into it and prefers to spend some time assessing the situation to avoid any reactions that may arise from players. “We’re going to do what we usually do, which is we’re not going to be the fastest, but we’re going to be the most thoughtful”Wilk said. It looks like we’ll likely see Microsoft go this route once it finds an acceptable way to integrate ads into games, even though it already sells ads on the Xbox home screen.

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