September 1 , 2009

As Microsoft, Bell go separate ways
new advertising opportunities emerge

Launch of MSN.ca and sympatico.ca offer new, innovative
online options for consumers and advertisers alike

By Amy Bostock

Today's launch of MSN.ca marks the end of a five-year partnership between industry giants Microsoft Corp and Bell Canada and the beginning of a new era that will see the two online juggernauts competing for advertising dollars. The split came after a two-and-a-half year discussion about the strategic alignment of the two players.

"In Canada we had a unique business model that was formed around subscriptions instead of ad sales," says Owen Sagness, vice president and general manager, consumer and online for Microsoft Canada. "We decided that we needed to make changes that would allow us to align our Canadian operations with how we were doing business around the world."

The result was the newly launched MSN.ca, a portal exclusively owned and operated my Microsoft.

A little history

In 2003, Microsoft and Bell started to talk. At the time, online ad revenue was sitting at about $500 million andboth companies had small sites that, although they were #1 and #2 in the market, were eaking out a profit.

"The two companies decided that it was time to put the two portals together," says Gary Anderson, vice president, Sympatico.ca. "Right out of the gate we saw huge increases in revenue - about 30-40 per cent year over year."

The site grew to be profitable for both companies but as time went by "it didn't take a rocket scientist to see that the online world was changing", according to Anderson. Media play was becoming more important and Microsoft and Bell began to talk about going their seperate ways.

So what now?

The new MSN.ca is expected to attract 12 million unique Canadian visitors each month with its clean new design, improved content components and cutting-edge technology. New features such as MSNBC, local news and CBC news and sports feeds are just the tip of the iceberg. WIth no more restrictions on global deals, MSN.ca will now bring BBC news feeds to consumers, something it hasn't been able to do before.

New technology components will allow users to access their Hotmail inbox directly from their homepage and to add a Messanger window.

Over on sympatico.ca,the portal will still operate on a lot of Microsoft technology, including Bing, but Bell will add four of its own new content channels to its independant site. These will be autos (focusing on new cars). health (a partnership with Reader's Digest), movies (in conjunction with the IMDD) and a finance channel which will focus on everyday money matters.

For advertisers, the new MSN.ca will offer "the broadest and deepest digital product on the market" accordig to Sagness.

"We're also launching Microsoft Advertising with will provide clients with the most relevant engagement across all channels - PC, mobil, web and even in-game. We'll be able to provide the best targeting capabilities and the biggest audience. This is a new opportunity for advertisers to have a one-stop shop across all channels."

Microsoft and Bell have signed a new three year agreement that will have the two companies sharing web traffic and some services. For example, Bell will be able to sell some of the ads on Microsoft's Hotmail and Messanger services and Bell has agreed to make Bing the exclusive search tool on sympatico.ca.

"Microsoft brough Hotmail and Messanger ad inventory to the table in 2003 and we have since built up a bid auction service for those ads," says Anderson. "Under this new agreement we've agreed to divide that inventory."

According to Anderson, this new deal was struck as a way to ensure that both companies are happy and can both compete in the online space.

"It was time to make one portal back into two and to do it in such a way, such as the traffic sharing, as to ensure that both portals are successful.

Two buys instead of one?

Now that the portals have split, clients who were used to getting two buys in one will now have to decide how to split their budgets.

"Resistance may come from agencies wanting to wait for the comScore numbers for the first month to come through before making any buying decisions," says Sagness, who claims that in the last 60 days his team has been out talking to advertisers about the new portal and getting good response.

"There's a lot of latent demand for the services that we'll be offering and I think the market is ready for this."