New Microsoft plan for advertising market

 

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By Reuters

Posted on 16 Nov 2007 at 08:27

Microsoft aims to be one of the top two players in the online advertising market in three to five years, says a company executive in charge of the business.

Speaking at a UBS investor conference, Kevin Johnson, president of Microsoft's platforms and services division, laid out the company's strategy to become a leader in the growing online advertising industry with a "10, 20, 30, 40" plan.

The plan, which represents Microsoft's aspirations over the next three to five years, calls on Microsoft to increase the company's share in web search, page views, percentage of time on the internet and percentage of advertising dollars.

The world's largest software maker currently trails Google and Yahoo in the $40 billion global online advertising market dominated by selling advertising alongside web search links.

Microsoft conveyed its seriousness about the business with a $6 billion acquisition of digital advertising firm aQuantive in August. It was the company's biggest-ever acquisition and the company paid an 85 percent premium to land aQuantive.

"If you look at the landscape of other competitors or other companies in this area, not only do we have the technology, research and development capability to deploy, but (we have) our willingness to invest for the long term," said Johnson in a question-and-answer session with UBS analyst Heather Bellini.

Under the "10, 20, 30, 40" plan, Microsoft wants its web sites like MSN.com and Windows Live e-mail to comprise 10 percent of all internet page views from about 6 percent now, Johnson said.

Redmond, Washington-based Microsoft also wants to boost the percentage of minutes spent at company Web sites, out of total time spent on the internet, to 20 percent from about 17 percent.

Another element of Microsoft's plan is to raise its share in online search to 30 percent.

Research firm comScore said Microsoft's search market share was about 10 percent in September. Johnson said Microsoft has worked to improve the relevance of its web search results and how it presents that information, but the company has failed to close the gap on Google and Yahoo.

Finally, Microsoft aims to capture 40 percent of all dollars coming through digital advertising platforms compared with around 6 percent now.