Microsoft’s top ad man assesses Russia’s digital prospects

(Moscow News – moscownews.com – Maria Stambler – November 28, 2013) Sharing, liking, posting, clicking, browsing – these actions are ubiquitous and have firmly cemented themselves into our existence with the rise of YouTube, Facebook and Twitter. New forms of communication emerge every day, and there is fairly little doubt that our lives are affected by the way we use and interact with technology.

Consumers’ changing habits in the use of media are also having an impact on companies and brands, which are constantly looking to keep up in order to reach their audiences more effectively.

While it does have some peculiarities, the Russian market is no different, said Frank Holland, Microsoft’s corporate vice president in charge of advertising and online business.

New delivery

Advertisers worldwide are looking for new ways to deliver messages, getting away from methods that fail to capitalize on the mobile revolution, such as banners or promotional clips that interfere with users watching desired content.

Advertisers “don’t want that, they don’t want interruption,” Holland said. “They just want to be able to engage with their consumers.”

Microsoft has therefore established strict rules over how it will relate to consumers, focusing its decisions on what is good for them, rather than on what is good for the company “in monetary terms,” Holland said – a principle he calls “centricity.”

“We’re going to create relative, beautiful, useful, engaging and immersive experiences that consumers want to be a part of, as opposed to distracting them from the task they want to accomplish,” he told The Moscow News.

Building for prospects

Holland sees opportunities ahead in advertising for Microsoft on two levels: business and location.

Advertising isn’t Microsoft’s strongest business, but he is looking to how the rest of the company can help make it bigger. For example, Microsoft doesn’t do a lot of cross-network traffic management between its various online assets – such as Skype, MSN and the Bing search engine – but its competitors do, and they do it well.

“Just by paying a little bit of attention to how we refer traffic from one site to another would be a huge improvement,” Holland said.

He also sees great promise in Russia, which is a small market for Microsoft, but one seeing annual growth of advertising revenue for the company of 85 percent.

“Russia is a very important part of our advertising business, because here we’ve got everything from our portfolio,” he said, including its second-largest audience for Skype: more than 30 million users.

Windows 8 applications are going to include a variety of advertising opportunities, being wrapped into an integrated “ecosystem” of Microsoft applications and online communication, Holland added.

Russia’s differences

There are notable differences in the way the Russian market operates compared to other markets, in part because it hasn’t reached critical mass in real-time advertising.

Microsoft Advertising also does not have a direct sales force in Russia, but rather follows a “hybrid” model by working with the Gazprom-owned Alcazar digital media sales house, which is its voice on the Russian market.

“They’ve got the local contacts that we just don’t, and the way that Russian media buying is organized, it’s effectively done by phone,” Holland said. “My ideal is being able to make everything automated, so this market is very different from that ideal.”

On the product side, Russia is a country of inversions: it has the second-biggest Skype user base in the world, but in places like Western Europe, the application is not that popular, while in China it’s nonexistent.

“Stuff that’s big here is not as big on a proportional basis elsewhere and vice versa,” Holland said.

Also, television is still king in Russia, so organizing the way Microsoft serves its customers is different. Still, Holland sees this as probably the biggest opportunity.

“Taking the TV audience and moving it into digital, where you can interact a lot more with consumers and serve them interesting, relevant and beautiful ads – that’s a fascinating opportunity that I want to be a part of,” he said. He expects Xbox One, the gaming system released just last week, to have a large role in this development.

The problem of piracy

However, software piracy is still a threat to businesses like Microsoft in Russia, despite a series of recent laws aimed at protecting intellectual property.

“I look at some of the online things that are happening, like rip-offs of really popular existing social media sites, for example, and think, ‘My God, what’s the incentive for popular online products or services to come to Russia if that’s the fate that they’re going to meet?'” Holland said.

But despite this, he believes Microsoft can give consumers products that they will enjoy and advertisers the opportunity to deliver brand-building messages that are different from anything they’ve done before.

“I’m excited about the fact that there are 140 million Russians in this country, and we can do better by them by offering them a better online experience,” he said.