Microsoft Rebooting Its Marketing System

CEO Satya Nadella rolled out a new version of Microsoft’s marketing OS yesterday, announcing in a memo that Chris Capossela is replacing the departing Tami Reller as EVP and CMO. Meanwhile, Mark Penn — the pot-stirring ex-politico who is fond of data-driven decision-making and skeptical about good old intuition — is moving up from directly overseeing advertising to the more nebulous title of EVP and chief strategy officer

“I have decided we need a single leader running marketing for the company,” Nadella said in an email to Microsoft employees that was also posted on its website. 

“How we articulate our value, how we market our message, how we deliver that value to customers through our advertising and other channels, all have to tie into an overarching strategy,” he continued. “Chris brings a wealth of experience to this need, serving in senior leadership roles across the marketing function for many years.”

Tongues are wagging, particularly about the role of Penn, who was president and CEO of Burson Marsteller from 2005 to 2012, where his leadership “has been cited by PR Week as a model for the public relations industry, particularly combining public affairs experience with public relations,” according to its Wikipedia entry.

“After news of Mr. Penn’s new job leaked over the weekend, his supporters at Microsoft trumpeted the change as effectively a promotion and a validation of the data-driven polling tactics he brought to Microsoft from his political career, which included work on Hillary Rodham Clinton’s 2008 presidential campaign,” the New York Times’ Nick Wingfield reports in a fascinating read about the polarizing style of the former pollster for President Bill Clinton and adviser to the likes of UK Prime Minister Tony Blair and Israeli Prime Minister Menachem Begin.

“His detractors at Microsoft, though, pounced, pointing out that Mr. Penn was losing control of Microsoft’s hefty ad budget in the change,” Wingfield continues. “At Microsoft, money is power, far more so than an impressive-sounding new job title, said these people, who spoke on the condition of anonymity to avoid friction with Mr. Penn.”

His last job in politics was certainly controversial.

“He was known for aggressive tactics such as the ‘3 a.m.’ ad questioning whether Barack Obama had the experience to deal with a global crisis,” writes Politico’s Eric Mershon. “He also was blamed for strategic decisions, such as emphasizing Clinton’s electability, that critics said gave Obama an opening to build grassroots support in the Democratic primary.”

Former CEO Steve Ballmer brought Penn aboard Microsoft in August 2012 specifically to improve the profile of its Bing search engine. 

“He used his hardball political skills to launch an anti-Google campaign called "Scroogled," which raised questions about Google's privacy practices — and also raised eyebrows for its negative tone,” reports the Washington Post’s Hayley Tsukayama. 

He added the advertising gig last July when Microsoft announced a major restructuring under Ballmer.

Penn “has also been credited with coming up with the more heartwarming ‘Empowering’ ad campaign, in which Microsoft technologies are seen enhancing people’s lives,” points out Janet I. Tu in the Seattle Times, including its widely praised Super Bowl ad.

Just as Ballmer’s “One Microsoft” realignment of last July was DOA, so, too, was the idea of splitting marketing responsibility between Reller and Penn.

“Reller’s departure was not unexpected, given she had been matched by Ballmer in a classic and problematic two-in-a-box face-off with Penn, a set-up that had become uncomfortable and, increasingly, untenable,” re/code’s Kara Swisher wrote Sunday in a story that scooped the official announcement. “As I wrote: ‘Reller took the job, of course, knowing the score, but apparently was focused on balancing Penn’s more aggressive tendencies.’”

In other announcements, ex-Skype CEO Tony Bates, who was a contender for the Microsoft CEO that went to Nadella early last month, is leaving his position of EVP of business development. Eric Rudder, EVP of advanced technology, will serve as the “interim lead” for Business Development and Evangelism, while continuing in his current role, according to Nadella’s email.

IDC analyst Al Hilwa tells the Washington Post’s Tsukayama that Reller may have been a victim of the poor reception for the Windows 8 OS. 

“The folks spearheading the advertising strategy appear to be affected as the campaign for Windows 8 was probably considered not a great value for the money,” he said. “It's a product issue, but very often the marketing, advertising and PR take hits in an engineering company.” 

Not only, right?