Ballmer to Advertisers: You're Key to Microsoft

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At a gathering of more than 500 of MSN's top advertisers today, Microsoft CEO Steve Ballmer emphasized -- and re-emphasized -- the importance of advertisers to MSN's future growth and plans.

"We've really turned a corner inside Microsoft in building a full appreciation and confidence in working with advertisers," Ballmer said during his keynote address at the MSN Strategic Account Summit. "We've got a lot more to do, but there is absolutely no doubt that one of the best growth opportunities for us over the coming years will be working in partnership with the folks in this room and many others to get messages in front of a very broad audience of Internet users."

Ballmer repeatedly told the crowd, gathered for an invitation-only powwow at Microsoft headquarters in Redmond, Wash., that advertisers were an integral part of MSN's plans. Improving technology for advertisers is an area where the company is focusing its current development resources and where it expects future innovations to come. (The company today gave advertisers a sneak peek at adCenter, its prototype self-service ad platform.) He credited the company's renewed focus on advertisers with turning MSN into a profitable business.

MSN has focused much of its recent development efforts on consumer-facing technologies, including MSN Search, Spaces, and home page personalization technology. Improving the user experience is a top priority for MSN, Ballmer said, in part because it allows the company to build an audience that can be reached by advertisers.

"We like to sell them things, we like them to subscribe to things. But for many of them, the best way to complete the experience is to include appropriate advertising and communication from the companies represented in this room," Ballmer said. "That lets us finish off our business model, it lets you achieve your strategic objectives, and it actually gives the consumer a richer and better experience."

While the theme of the two-day summit was "Mastering the Medium," Ballmer was quick to point out that the medium was a moving target. He highlighted changes in media types, video, and form factors of access devices, as well as changes in popular perceptions of privacy and intrusiveness from advertisers.

"The medium is going to keep changing. It's not about proving that the medium is important anymore -- it is. I see that widely accepted among the advertisers that I talk to," he said. "The question now is how to get the best value out of the medium today, tomorrow and next year, as the medium continues to evolve and change."

He stressed the importance of having "the right kind of a dialogue" with a user, calling pop-ups and spam the "techniques of yesteryear." The future, as he has said many times before, lies not just with our current idea of what a Web site is, but with things like IPTV -- television delivered using Internet technology.

Microsoft has long invested in IPTV, committing research and development to projects in the space for the last decade. Its 1997 purchase of WebTV may have been ahead of its time, Ballmer said. The movement of television to an on-demand model, delivered via Internet protocol, has only recently begun to take hold, with telco providers and cable operators in a heated battle for subscribers to new IP-based services.

"Clearly, we were over-optimistic about how quickly that would happen. Thankfully, we kept at it," he said.

He predicted that, while IPTV wouldn't affect advertisers in the short term, it would certainly change the way traditional media is bought within the next three years.

Microsoft itself is putting a big emphasis on online marketing, placing it at the top of its advertising budget. The company has also moved many of its offline efforts -- like direct mail, seminars, and print advertising -- to an online analog.

"The first thing we do when we set our ad budget is tell people we must saturate certain online properties with our advertising. That's the most important thing we'll do -- before we buy any TV, before we buy any print, before we do anything, we have to make sure we put down a foundation," Ballmer said.