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Microsoft Considers Ad-Supported Consumer Software

Only some of Microsoft’s consumer software titles are generating any real money, and a predicted further decline in revenue may push Microsoft to adopt some version of a free, ad-supported software model, writes CNET (via marketingVOX), citing Microsoft internal documents that it has obtained. Although Office and Windows are vastly profitable, others - such as Works or Money - are not. “The outlook for the packaged consumer retail software market is poor…and consumers appear less willing than ever to buy software applications off the shelf,” according to a Microsoft strategy paper.

That, coupled with the possibility that others might offer free software, has apparently led to Microsoft’s considering free, ad-supported versions of some of its consumer titles.

 

An MSN strategy paper points to the success of Google’s ad-supported Gmail. The paper suggests non-targeted ads for low-cost services, and targeted ads - based on “an exchange of user information” - for high-cost services, citing adware firm Claria, which claims ad rates 6-20 times those of traditional web advertising because of its ability to target.

Microsoft is now testing its own, AdCenter ad system, which combines context with user demographic information.

Earlier this month, Microsoft introduced two new ad-supported web services - Windows Live and Office Live - which will deliver applications and services to businesses and consumers directly via the web, without their having to download the applications.