Marketers Intrigued by Windows Live

While Microsoft touts its new Windows Live initiative as a sea change in the way software is delivered, advertisers are more likely to see it as a welcome additional ad opportunity. It’s also a strong indication that Microsoft is getting serious about building its advertising business.

“This is going to create more opportunities for advertisers across Microsoft properties. It will help advertisers increase reach, as well as offer more targeting and more control over ads,” Eric Hadley, MSN’s senior director of advertising and marketing, told ClickZ News. Hadley said he believes ads on the communications services would be more appropriate for advertisers seeking massive reach and awareness, while ads on content pages would be more contextually relevant.

With Windows Live, as well as the upcoming Office Live and Xbox Live sites, Microsoft has added more places where ads managed via adCenter would be distributed. The ability to place very targeted ads across properties will be the most attractive aspect, said John Cate, VP and national media director at Carat Fusion.

“For most marketers, there’s immense pressure on the online channel to produce business results. That leads to immediate interest in this sort of move,” Cate told ClickZ News. “The thing that differentiates Microsoft, and which no other company can claim, is that they are leveraging the massive installed base of their operating system and applications.”

At launch, Windows Live will offer many of the same opportunities that have been available in the online applications on MSN — including ads in instant messaging, blog hosting and Web-based email — but with more contextual and behavioral targeting capabilities, Hadley said. When Office Live launches next year, it will add more application-based ads.

While some marketers may worry that this would overexpose users to ads, others argue that relevant ads — targeted via the promised features of adCenter — won’t be perceived negatively by consumers. “There is always a threat of ad clutter. However, the more targeted the ad, the less likely it is to be perceived as clutter,” said Kevin Lee, executive chairman of SEM firm Did-it. “If it’s an ad I want to see, then it turns from advertising into editorial . . . almost.”

The Windows Live initiative also has broader implications, indicating that Microsoft will be placing a larger focus on advertising. While the MSN unit has always been dedicated to advertising, what’s new here is a larger Microsoft commitment to the industry, according to Jeff Lanctot, VP of media at Avenue A/Razorfish.

“This is Bill Gates saying that advertising is important to the future of the company,” Lanctot said. “When adCenter launched, it was viewed by many as Microsoft’s search answer. Now it’s clear that search was step one, and adCenter was step one of Microsoft’s commitment to advertising.”

Lanctot, along with several other ad-industry heavyweights, was invited to Tuesday’s launch of Windows Live in San Francisco. That in itself is a good sign, he said.

“I really was left with the idea of a seamless experience; it’s something that resonated with me,” Lanctot said. “They have a lot going in their favor, but there are obstacles as well. Now it’s all about the execution.”

The plan is to create opportunities for advertiser to use adCenter to buy multiple ad units across multiple Microsoft properties — which will eventually be delivered across multiple devices.

Microsoft has been increasingly devoting resources to its advertising business. In the spring, it began beta testing adCenter to manage paid listings on MSN Search, launched in France and Singapore in September, and is now in a pilot stage in the U.S.

“Microsoft has made a huge investment in advertising, both on the development side and the sales and marketing side,” Hadley said. “Our technology brings a lot to advertising to make it more relevant, and we’re bringing our learnings from MSN to build an ad network across our properties to help reach the Microsoft audience in different ways.”