February 14, 2000 11:00 AM PST

Microsoft launches $150 million MSN ad blitz

Four months after overhauling its long-suffering MSN Web strategy, Microsoft today is matching the big-budget marketing expenses of its Internet rivals by launching a $150 million advertising campaign.

Dubbed the "MSN Project," the television See related story: Mapping MSN's changes campaign depicts four strangers using MSN's Web services, such as its search engine, shopping site and Hotmail free email service, to complete daily tasks.

Microsoft also introduced a butterfly logo for MSN as part of the launch. According to the company, the butterfly "symbolizes the uniqueness, aspiration, freedom and personal empowerment that people experience when using MSN."

The commercials will appear on shows such as "Frazier," "Law & Order," "Now and Again," "Who Wants to Be a Millionaire" and NBA games.

"The main goal of this campaign is to raise the brand awareness for MSN and the services that it offers," said Deanna Sanford, MSN's lead product manager.

Microsoft is trying to return to its roots with MSN's latest incarnation, stressing software services over content. How that move will differentiate the site as a Web destination remains unclear, however.

Microsoft has begun marketing its Web strategy as the next platform to distribute its software services to Web users in general. These "megaservices," as Microsoft calls them, are not exclusive to MSN. Rather, the company hopes to entice other online retail or content sites to use its services, such as its Web identification and payment service, MSN Passport, and its instant messaging client, MSN Messenger.

The campaign is the latest effort from Microsoft to position itself as a major force on the Web. Although the software giant has invested heavily in its MSN Internet strategy to compete with industry leaders such as America Online and Yahoo, so far it has come up short.

Microsoft has re-evaluated its Web strategy several times following failed experiments such as TV-like Internet programming in the mid-'90s and a foray into creating content through its Sidewalk city guides, which eventually were sold to Ticketmaster Online-CitySearch.

Since then, Microsoft has increasingly distanced itself from Internet content. The company has publicly stated its disinterest in owning content, given questions about its strategic course in the aftermath of AOL's multibillion-dollar agreement to acquire Time Warner.

AOL is the most visited network of Web properties, according to tracking firm Media Metrix. In December, 53.7 million users visited its online service and myriad Web sites, such as AOL.com, Netscape Netcenter and CompuServe. Yahoo ranked second in December, with 42.3 million unique visitors.

"Microsoft sites," which include Microsoft.com and MSN-branded properties, ranked third, with 40.4 million unique visitors in December.

In refocusing its efforts, MSN also Puppet masters: Who controls the Net has undergone a personnel shake-up. Last September, the company plucked former Silicon Graphics chief Richard Belluzzo to head its Consumer and Commerce Group. Belluzzo joined veterans from Microsoft's former battles in the Internet Explorer browser and Office teams, including senior vice president Brad Chase and now-director of marketing Yusuf Mehdi.

Whether the shift in strategy will help MSN close the gap with its rivals remains to be seen. According to analysts, the outlook for Web portals is less rosy than it was last year, given the widening rift in advertising revenues between the top two portals, AOL.com and Yahoo, and the remaining portal players.

Research analysts such as Charlene Li of Forrester Research have warned that advertising revenues will flow toward top-tier and specifically focused, or "vertical," portals.

"Traffic declines and less-qualified traffic at other broad-based portals like Excite and Lycos will cause advertising share at these sites to shrink...by 2004," Li wrote in a report published in December. "Instead, retailers will spend their marketing dollars with vertical winners."

 

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