The Kaiser Edition

As I mentioned yesterday, I interviewed Kris Hoet (EMEA marketing manager for MSN Windows Live) this morning. We chatted for about 2 hours and I’m really happy with what came out of the discussion. I should point out that we didn’t get to cover everything, but what we did cover is very interesting and I’d be worried has hell if I worked for Google. His views on the advertising industry are just as interesting so without further waffle I give you: The Kaiser and a Blue Monster.

When you think Web 2.0 and Social Media, Microsoft doesn’t really spring to mind why is that?

It’s a question I ask myself regularly as well. It most certainly has to do with the fact that people don’t see us as innovative or cool, although we have definitely things out there that are worth considering.

Windows Live Spaces is a good example of a service that is not taken seriously amongst social media influencers - still looking at unique users it’s bigger than myspace, facebook et al. There are +4 billion photos shared on Spaces which is pretty social if you ask me.

Hotmail is another one, we were behind a few years ago when Gmail came into beta and we knew that hotmail wasn’t all that great anymore: 25MB storage, old interface, but looking at the investments made over the last few years it has gone into full ajax, drag & drop and new interface with a 5GB storage; remember that this is on approx 280 million users.

KAISER UPDATE: Interesting post from Seth Godin about Hotmail and Facebook here.

One of the things I remember when people started talking about web 2.0 and how everything is supposed to be in ajax (which i don’t necessarily agree with) and how we were behind - is the example of Outlook Web Access which is maybe not a well know service by general audience but it still is one of the first ajaxified webservices out there.

No, we’re not all there yet but yes, we need to do more efforts than some of our competitors to make people aware of that we are in the game.

So you’ve got all of these people in your online communities talking about cakes, the weather, operating systems, and servers what do you want to do with them?

Within Windows Live we try to let people connect to eachother very easily (like messenger, hotmail) wherever they are (think mobile messenger, mail,) - find information they need (msn portal, msn video, live search) and share these with their connections (spaces, mail, shared folders on messenger, skydrive).
Looking at the number of people using these services, with mail and messenger around 280 million, and over 100 million Spaces (and the +4 billion photos being shared on Spaces) it seems to appeal to some consumers and some new releases are pure innovation (windows live writer, 3D/birds eye view on mapping) and some releases are more what you could call our view on something that existed already.

Why do it then? because it fits in what we want to bring to our customers (easy to share things) and we can differentiate by integrating deeply in our services like messenger - I can for instance share a file with only you on Skydrive without you have to sign up to my buddy list on that service, you’re already on my messenger list.

That’s all well and good, but what’s really in it for Microsoft? Show me the money Kris.

for windows live?

Yes. You’re connecting people and that’s honourable but where is the revenue for Microsoft?

The interaction we can offer to brands around our users using these free services - and that goes beyond banner ads by the way. that’s why we bought screentonic (ads on mobile) or massive (advertising in games and virtual worlds).

So the general opinion that Microsoft has missed the Web 2.0 boat is a misconception?

Probably part of it is true in a sense that we could definitely have started focusing & developing on this sooner. Web 2.0 is defined by a few things. Network effect: the hotmail spam engine is based on that, is based on participation & collaboration (and stops over 3 billion spam messages a day by the way). The web as platform - think of popfly for instance. And hotmail is a good example of being late in the game with investment, but it still is one of the largest webmail services in the world.

So why all the fuss about Facebook?

I don’t know the details about the deal but I like it personally. Is it too much, too little? We’re even more partners like before - hopefully which will make further developments on the platform (on which we helped before already) and on the ad platfrom in Facebook. It might integrate some more of our services which is good as well.

Microsoft is a client and deals with agencies all the time. Have you seen a real shift towards digital/web/communications amongst agencies or do you think they just pay lip service to it?

There are quite a few differences between countries on that point, but the real shift still has to happen if you ask me. As long as agencies think of a plan and add a bit online to it at the end, nothing is really going to change.

Are they too passive – waiting for you to tell them what to do, or do they simply not get it?

I Spoke to a media/marketing magazine recently on why they didn’t write more about online/interactive/in game advertising and almost only about tv, radio and print. Their answer was that they followed the advertising spend - now given traditional marketers read these publications like a bible… that’s a bit chicken and the egg.

Assuming that the Advertising/Communications Industry model is an old clapped out dinosaur what would be the “Microsoft way” of rebuilding it?

I think we’re doing a few things, we’re building reach: windows live, msn… but also xbox live, office live, … we already had a platform to serve banners and textlinks, but with the aQuantive acquisition we gain a huge platform (on which we worked together partially already) and think of AdCenter for self service ads etc… an important shift has been made as well in making sure these ads are served in a non intrusive way there are a lot less ads in windows live hotmail then there were in msn hotmail.

Yes but those are all applications and products. What’s the Microsoft way of turning a massive tanker back on track. The blue monster?

Tough question - we will try and deliver innovative advertising solutions integrated in our services/products where it makes sense and we do have the relationship with many agencies and advertisers already (not yet on the long tail though) - and we’ll show that we have an offer that works in the ‘age of conversation’ and make sure people know. and I don’t think we’re alone either - yes we’re doing what we think is right, but there are quite a few companies that are trying together the make the advertising world to make that huge and necessary shift.

Can MSN Windows live remain community/conversation platform or there is there a future for creating “islands” of content – meaning that MSN would create interest group related content?

For now it looks like MSN will stay a more broad reach/general interest content. But I do believe that content for smaller interest groups will find it’s way on MSN as well through a further integration of Spaces and MSN for instance, or Soapbox on MSN video (which is our service for user video uploads) and we see some examples already - still, largest chunk of traffic comes for the big channels (new, entertainment).

Has making stuff like the Xbox 360 helped to make you look at little cooler? What impact did Halo 3 have on MSN Windows Live and Silverlight?

I guess it did make Microsoft a bit cooler, it mainly made sure people knew we were serious about being in the game industry (like we are serious about the advertising industry now as well ). And they did some cool things with Halo3 and Silverlight so these things will make differences yes - don’t have numbers or anything on how much.

Serious about the advertising industry? Should Sir Martin start to worry about you guys?

Serious about being able to offer reach and solutions for clients and agencies to get in touch with the consumer - we won’t become a giant ad agency tomorrow though.

It seems, that in terms of ATL brand communications – especially the corporate brand, that Microsoft has left the hand break on. Considering you’ve got some good products and a huge share of the market isn’t it time to lighten up a little? A little more “bring back the love” maybe?

I agree. And there will be some more ‘bring back the love’. But you’re right - our own advertising needs improvement - I’m already happy to be helping in ‘bring the love back’ and hopefully contributing that way.

You’ve got silos of online communities with Windows Live Spaces, MSN messenger, X-box live, MS Virtual Earth, Taifiti and of course the Windows OS, server stuff and the office products. When do you think things will really start to converge?

You see that already I think. Xbox live and live messenger are already connected. I can chat on Xbox live using messenger while gaming - and my messenger friends can see which game I’m playing on Xbox (that is if I wish to use that of course). Spaces and messenger are tight up very closely - thinking even that spaces is more and more becoming your messenger profile page almost.

Tafiti is a bit different since it’s not really a service but a mashup using loads of our APIs and technologies. But integration is there and remains big focus - and also what we believe is the differentiator for some of these services (think of the skydrive example but there are many others) and the LiveID (your hotmail address for instance) is key in all that. With office as well - there’s an outlook connector that allows you to sync your hotmail into outlook. The office communicator allows conversations with live messenger (and yahoo as well for instance). i think you’ll find deep integration with many of the new services and software - another example for instance is that your rss feeds in IE7 you can also read in outlook.

Who is more of a pain in the arse; Apple or Google?

Not sure if I would call them that. I work for the online services (MSN & Windows Live) so Google is more of a competitor for me than Apple is.

So you’ve got all these cool app’s and platforms full of people. And you’re taking on Google, and the ad industry. You’re serious about “the age of conversation”. Where next? How does MS want to shape the future of online communications?

Although I’m a marketer (and mostly people like me invent these terms) I’ve never been a big fan of web 2.0 as a sort of one-size-fits-all definition for cool innovation on the web so web 3.0 and other don’t make sense for me now.*

That said, looking at what web 2.0, software as a service, software and services, etc. we’re only at the start. We’ll keep investing in what’s making better connections, better ways of sharing, integrating voice (like in the mobile messenger client), video, web based offerings vs. software based and mobile vs. desktop (like we do for messenger - has desktop client, web in the works, mobile web version and mobile client version).

I don’t know what the web will look like in two years, It makes me think of a quote: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. ” I think the quote is very right - and not because it’s from Bill Gates.

But things well change for sure - I believe we’ll get to a point where you won’t see the difference anymore between what’s on the desktop and what’s in the cloud - although there will clearly always be things on both. You’ll be always on, you’ll have very rich applications - but when? Will MSFT be part of that? I’m convinced we will be.

The whole strategy of Live (Office, Windows, Xbox, …) is to connect software with services, desktop with the cloud, we’re investing largely in storage as you could see from the evolution in Hotmail storage for instance, and with Expression Studio, Silverlight and others we are moving into the area of creating rich internet applications.

That’s it. Huge thanks to Kris for taking the time to chat. I hope that you lot find this interesting.

*Für die Deutschen: Sehe auch Patricks “Konsequente Fortsetzung der Grundidee des Internets – Upgrade.”

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