Microsoft has plans to double its advertising revenue to $20 billion per Year

It looks like Microsoft is on the rise, announcing plans to double its advertising revenue from $10 billion to $20 billion per year by the end of 2022.

Microsoft’s ad business is expanding, yet it still meets strong opposition from TikTok, Amazon, and Apple. Despite the challenges, Microsoft’s CEO Satya Nadella is confident that the tech giant can achieve its annual target.

Microsoft’s decision to double its advertising revenue could be a game-changer for the industry. With more money coming into play, companies may be more inclined to invest in marketing and advertising opportunities on Microsoft platforms.

According to estimates, if Microsoft meets its goal, it would become the world’s sixth-largest digital ad seller, ousting Tencent. Rob Wilk, Global Head of Microsoft Advertising stated that Microsoft’s advertising division deserved recognition and they are finally getting it.

This is good news for the company, as it suggests they are in a stronger position than they were in 2015 when Wilk was considering whether to join them. Wilk felt that Microsoft was not ready to venture into the advertising business fully because it had just sold its Atlas ad server to Facebook (now Meta) and given AOL its display advertising business.

Wilk now leads the Advertising Division, which has seen recent success since acquiring AT&T’s ad unit Xandr and partnering with Microsoft. The partnership offers an ad-supported subscription backed by Microsoft.

Advertising consultant Matt Prohaska believes that Microsoft could still boom and become one of the world’s leading ad players, even though it is currently struggling economically and has tough competition from TikTok and Apple sorts of companies.

Microsoft’s main ad properties contain Bing search, Xbox, MSN, and many other websites. They utilize Xandr in order to sell digital ads. In addition, Microsoft has introduced vertical ad formats as well as credit card ads. They have also expanded its audience network into 66 new markets since its creation.

Although Microsoft’s ad revenue for their first quarter of FY23 increased by 16%, Amy Hood, the company’s CFO, told-

“Reductions in customer advertising spend, which also weakened later in the quarter, impacted search in advertising and LinkedIn marketing solutions.”

Nadella attributes the search and advertising success to “higher search volume and Xandr,” saying that Microsoft has expanded its serviceable geography by 4X in the past year.

Microsoft Edge may also be responsible for the increase in Bing search and advertising revenues.

Nadella further states that-

“Edge is the fastest growing browser on Windows and continues to gain share as people use built-in coupon and price comparison features to save money.”

Rob Wilk, in an October interview, announced his intentions to make buying ads across assets simpler for partners. He stated-

“We have a lot of plumbing work to do. Microsoft also needs to differentiate itself from competitors that have similar properties but have far more mature advertising businesses, like Google. Wilk said Microsoft is more “partner oriented” than Google.”

Netflix has teamed up with Xandr, a demand side platform, to allow advertisers to purchase ads through the platform. With Microsoft taking a reseller fee for each transaction, it’s predicted that the partnership will bring in lots of money – over $10 billion in ad sales alone.

Not only does Microsoft generate a lot of revenue from gaming, but the recent acquisition of Activision Blizzard could be a turning point if Xandr is used to buy in-game ads. This would give them a unique selling point and likely attract even more customers.

Microsoft has a great opportunity to make a huge impact on the digital advertising landscape. With the right strategies, Microsoft can meet its goal of doubling ad revenue and becoming an industry leader. It will be exciting to see how Microsoft continues to innovate in this space.

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