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Microsoft Breaks Search Ad Campaign; Revs, Profits Up

Microsoft today broke a print and online ad campaign talking up its search capabilities; it also reported revenue and profit gains - though its online division lost money.

Microsoft’s ads are promoting the recently launched Windows Live Search, which will eventually replace MSN Search as its primary web search engine, writes MediaPost (via MarketingVOX). Highlighting the engine’s image search, local search, and mapping tools, full-page print ads will appear in the New York Times, Wall Street Journal, USA Today, San Francisco Chronicle, Seattle Times, Seattle Post-Intelligencer and San Jose Mercury News.

Created by McCann WorldGroup, the ad copy paints Microsoft as the search underdog against Google: “Before we begin, let us state the obvious. We’re late to the game. We admit it. But instead of shrugging our shoulders and becoming a footnote in search history, we’ve decided to write a few new chapters.” MSN has steadily lost internet search share; with nearly 12 percent share, down some 3.5 percentage points from last year, it remains in third place.

Meanwhile, Microsoft reported quarterly results that surpassed Wall Street expectations, with both revenue and profit growing 11 percent, boosted by server and videogame sales reports the New York Times. But results at its online division underscored the challenges it faces online: Revenue fell about 5 percent, to $539 million, and profit fell from a $68 million gain a year earlier to a loss of $136 million.

According to Microsoft SVP and CFO Chris Liddell, as quoted by SeekingAlpha, “We forecast revenue in the Online Services business to grow between 7% and 11% for the year and to be up 3% to 5% in quarter two. The full-year growth number implies significant year-over-year growth in the second half, based upon growth in both search and display advertising revenues.”

Overall revenue for the quarter rose to $10.8 billion, compared with $9.7 billion in the period a year earlier. Net income increased to $3.48 billion, or 35 cents a share, compared with $3.14 billion, or 29 cents a share last year. Earnings per share were 4 cents higher than analysts’ expectations.