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Microsoft Splits Its Global Ad Business Between IPG and Dentsu

Total account revenue is estimated at $100 million

Microsoft began its global advertising review with the aim of consolidating its business within a single ad holding company. In the end, however, the business was split between two: Interpublic Group and Dentsu, Microsoft said today.

That’s still fewer than the current four holding companies that have relationships with the technology giant (WPP Group, Interpublic, Publicis Groupe and Dentsu). Each company put forth a team to pitch Microsoft’s massive marketing services business, which includes traditional ads, direct marketing, digital ads and media planning and buying. Total account revenue is estimated at $100 million.

Going forward, creative responsibilities—including traditional, direct and digital ads—will be handled by IPG shops like McCann Erickson, The Martin Agency and Erwin Penland. McCann, via its Craft unit, also becomes the distribution network for Microsoft ads around the world. Losing business in this consolidation are WPP shops Wunderman and Possible, Publicis Groupe’s Razorfish and independent Omelet, among others.

Media planning and buying, and search advertising, meanwhile, has been consolidated at Dentsu Aegis units like Carat. Previously, media responsibilities had been split chiefly between Publicis Groupe's MediaVest (U.S.) and Interpublic's UM (overseas). So, Aegis' gain is a loss for both MediaVest and UM. Global media spending exceeds $1 billion annually.

In a statement, Microsoft chief marketing officer Chris Capossela said, “We believe both [IPG and Dentsu Aegis] will help us communicate more strategically and efficiently in a rapidly evolving marketplace.”

The business shifts come amid a period of reinvention at Microsoft. Last year, the company moved toward a more centralized operation and in February, insider Satya Nadella succeeded Steve Ballmer as CEO. Even after the review began, Microsoft took marketing leadership responsibilities previously shared by two executives and put them in the hands of a single exec: Capossela.

Moreover, the company, in its initial request for proposals, signaled its intention to shift away from individual, product-specific ads and toward broader campaigns directed at consumers and businesses. And now finally, Microsoft has picked its partners for achieving those goals.

Joanne Davis Consulting in New York helped manage the search.

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