Microsoft Case Study

CASE STUDY: Microsoft

RTB Drives Yield: Microsoft Advertising Lifts Total Revenue by 13-16%

Microsoft Advertising brings industry-leading expertise to both brand advertisers and small to medium businesses, connecting them to 894 million consumers globally across 42 markets. In addition, Microsoft Advertising sites are the third largest online media destination in the United States, accounting for over 10% of the total minutes consumers spend online (comScore Media Metrix, Q2 2011). Their sites include premiere Internet properties such as MSN, Windows Live, MSNBC, FOX Sports and TODAY.com  

In Spring 2011, Microsoft Advertising launched the Microsoft Advertising Exchange, which allowed them to make premium audiences on brand-safe sites such as MSN and Windows Live available for real-time bidding (RTB). Advertisers gained the efficiency of RTB while creating an effective way for Microsoft to monetize their discretionary inventory. As one of the largest global premium publishers with a flourishing direct sales and network business, it was important for Microsoft Advertising to strike a balance between its carefully maintained reserved sales channels and this new indirect channel of demand.

Microsoft decided to roll out their RTB strategy with one property to test the optimal setup that would balance reserved and discretionary sales. They chose Windows Live, a premium publisher that reaches 64 million unique users a month on sites like Hotmail and Messenger. Microsoft partnered with AppNexus to build a suite of yield management controls for the Microsoft Advertising Exchange, where a wide variety of demand partners compete for Microsoft inventory in an auction environment.

PROBLEM

Microsoft was interested in finding new ways of generating revenue from un-monetized inventory on Windows Live, but not at the risk of cannibalizing existing sales. For example, Microsoft may sell a guaranteed advertising campaign on Windows Live to a greeting card company looking to reach new customers, since 80% of Windows Live users are likely to discuss special days and holiday plans. Microsoft didn’t want its RTB strategy to affect reserved and discretionary sales such as the greeting card campaign. Microsoft also wanted to maintain the safe, high-quality user experience that consumers expect on Microsoft sites.

SOLUTION

The Windows Live team used yield management controls, available on the Microsoft Advertising Exchange through a partnership with AppNexus, to address their business concerns regarding channel conflict. As a result, Windows Live generated an estimated 13-16% lift in total revenue on RTB inventory.

Bid Landscape Insights Allowed Adaptive Inventory Valuation
The Microsoft Advertising team used bid landscape insights — data that has been compiled and analyzed from auctions on the Microsoft Advertising Exchange, available via a data feed from AppNexus — to understand how bid density changes at different price points. Using these insights, the Microsoft team analyzed how adjusting parameters in price controls would impact site monetization. The team used these insights to directly inform the yield control settings on Windows Live inventory.

Yield Management Controls Prevented Yield Erosion
AppNexus's robust yield management controls allowed the Windows Live team to create rules not just for audience characteristics, but also down to the level of individual ad placements. For example, the Windows Live team had the option of valuing above-the-fold and below-the-fold inventory differently, and created rules to avoid conflicts with guaranteed campaigns. With over 10 inventory and audience parameters within their control, the Windows Live team was able to create a pricing strategy to prevent yield erosion.

Visibility Profiles Prevented Channel Conflict
Channel conflict was a main concern when launching exchange capabilities on Windows Live. Exposing too much data posed a risk to sales through other channels. The solution was to make inventory available for sale under several custom URLs, enabling buyers to purchase ads based on broad pools of similar inventory, but not at a site or placement level. By using AppNexus's visibility controls to limit the type of data they shared with buyers about the inventory, Microsoft was able to maximize the exchange opportunity without jeopardizing reserved sales.

AppNexus Auditing Enforced Microsoft’s Creative Policies
Microsoft Advertising enforces a stringent and comprehensive Creative Acceptance Policy (CAP) for all advertisements on its properties. The CAP ensures ads meet all editorial and technical requirements for sites in the Microsoft Advertising network. Previously, publishers trusted that each buyer was informed on the CAP, and that each buyers’ creatives were in compliance with the CAP. This led to inconsistency in the enforcement of the ad standards. AppNexus’s auditing process includes a human auditing team that reviews ads for compliance with Microsoft’s CAP as well as machine scans that detect malware, spoofed IP servers and other malvertising tactics. Microsoft now had the assurance that ad buys from the Microsoft Advertising Exchange would maintain a high-quality experience for consumers.

RESULTS

Overall higher yield: Windows Live estimated a 13-16% lift in total revenue on RTB inventory as a result of using the Microsoft Advertising Exchange.

No adverse impact on reserved sales: Reserved sales remained healthy. The volume, rate, and revenue in the reserved channel all showed an increase year over year.

RTB drives yield: Microsoft realized significant yield benefits by putting ad inventory in an exchange marketplace for real-time bidding. Microsoft has since rolled out the exchange strategy to all of its owned and operated properties both in the US and internationally.