Commentary

Just An Online Minute... Gates Got Game

  • by March 29, 2004
The topic was "The Future of Advertising" and expectations were high. How often, if ever, has Microsoft's chief software guru spoken on such a topic?

It was Bill Gates' first address to the annual MSN Customer Summit and he admitted to jitters prior to showing a commercial to the A-list crowd of advertisers and agency executives assembled last Friday. Prior to his talk, Gates showed a wacky, faux commercial for Microsoft Windows Office (part of the software maker's "Great Moments at Work" series of TV spots by McCann-Erickson, San Francisco) in which he's appears boogeying alongside a spinning TabletPC. It was hilarious, but probably beside the point.

Good thing Gates has left ad sales to Joanne Bradford, MSN's chief media revenue officer. Steve Ballmer, Microsoft's president-CEO, was a revelation--he gets it. Ballmer called online advertising "a very powerful marketing vehicle," and underscored Bradford's call for big advertisers to put 8 percent to 12 percent of their ad bugets toward online media by 2005.

Gates' talk was billed as "The Future of Advertising," but within 30 seconds, I knew that all roads would lead back to software. There was nary a word about advertising from the top dog. Gates earnestly drilled down his vision of seamless computing experiences in a didactic, though kindly, manner. He said that in the next five to six years, advances in computer chips, storage, wireless networking and display technologies will drive the pace of software and technology evolution.

"There will be more devices and more complexity, we want to know how can we make it simple," Gates said, referring to the TabletPC, wireless phones/PDAs, digital TV, wrist gadgets, videogame consoles, telematic/global positioning devices, and digital imaging. "We want software and hardware working on behalf of the user, so that as you move around, the technology is there for you without a lot of work," Gates enthused.

Naturally, Gates' vision is software-centric. In other words, all technology advances include enabling software at their core. He spoke about Wi-Fi hitting critical mass, broadband costs coming down, the rise of speech recognition technology, and a new realism in graphics, "Everything will come down in cost and it will be glued together by software." Advances in communications will enable seamless information access, in Gates' vision. MSN is a linchpin in that vision via MSN Messenger, MSN Mobile, MSN Direct, and MSN Family. Microsoft's Xbox Live videogame franchise will eventually offer consumers the ability to share games, messages, and photos.

One of the most interesting things Gates alluded to was how marketers are starting to reuse content from videogames in TV commercials. A TV spot currently running for the Volvo S40 sedan uses footage from a videogame featuring the vehicle. Ad insertion and product placement within videogames aren't far behind, Gates asserted: "We're just at the beginning of that realm. It takes creativity to come up with advertising that users will find value-added."

Software-enabled multimedia program guides will drive the growth of digital TV and video-on-demand, "The guide will become a very key homepage-like asset," Gates said.

By the end of his talk, Gates finally got to the sweet spot: "Old assumptions are no longer safe. There's more media fragmentation and less consumer attention. Engagement and interactivity are going to be a big part of the new model," he said. "We see PC search/media activities influencing TV programming and ads, video-on-demand choices influencing advertising, and geo-targeting and location-relevant advertising on mobile phones."

On spyware: "We've seen a lot of software that you download for free on the Internet, and people who are just trying to turn the PC into a billboard. And we are going to help users be in control of knowing what's on their system and helping them get it off their system. We want to make sure that the user has control even within our properties," Gates said.

"People accept advertising. [It's all about] striking the right balance. Obviously popups got to the point where they're now sort of discredited," quickly checking himself, "Well maybe that was a little strong."

On MSN's business model: "Advertising is going to be a key part of the economic equation. People don't like any of these things--subscription fees, advertising. ... There has to be some transactional fees, some subscription, or some advertising. Advertising will be a huge, huge part of it."

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