Gates' Crystal Ball Clouded on Ad Technology

30 March 2004

Not only will the pace of technological development affect everything we do from the way we talk with friends to forging business deals, it is also set to change how advertising reaches people.

Thus spake Microsoft chairman Bill Gates, addressing Friday's conference for advertising and marketing executives at the software giant's HQ in Redmond, Washington.

A challenging, neo-Damascene scenario, straight from the lips of the planet's richest citizen. But how, exactly, will this seismic sea-change come to pass?

Um ... er ... uh, seemed to be the reply. "Nobody has a crystal ball that says how this is going to come out," admitted the Microsoft Maharishi. Instead, he offered his audience of marketing professionals a few well-worn generalizations.

New technology, he assured, will create better possibilities for targeting advertisements at certain demographics: by age, geography or gender for example.

Gates cited a well-worn vision of tech-driven targeting: a person toting a cellphone walks by a store display (or billboard) which immediately changes to align with the demographics of that that individual, identified by his/her unique cellphone number.

[But what happens if a female senior citizen with a high disposable income passes the display simultaneously with a teenage male high school dropout? It is not recorded whether Gates answered this question. Or was asked.]

New technology, warned Gates, will also require advertisers to find a balance between targeting audiences and annoying them -- a problem that also taxed the radio industry back in the 1930s. As an exemplar he mentioned online pop-up ads, initially believed by advertisers to be a good idea.

• Speaking at the same conference Yahoo! chief executive Terry Semel told delegates that his company, along with Microsoft, are working toward a bigger slice of large corporate ad budgets.

It is currently estimated that major marketers devote a mere 1% to 3% of their budgets to web advertising. That, said Semel, is seen as an opportunity to hike market share, partly at the expense of US television networks, which currently contend with a fast-fragmenting audience.

Raising aloft the Microsoft-Yahoo joint banner, Semel proclaimed: "We have a common goal … to take a greater and greater share of [the] market. Not only do I welcome the idea of doing things together, I think it is absolutely critical. There is no such thing as a major marketplace for advertisers ... if there is only one network to talk about."

Meantime, both companies have invested heavily in search engine technology -- seen as the driving force behind web advertising growth.

Yahoo! has pursued this holy grail through acquisition, last year spending over $1 billion to buy web search companies Into and Overture Services. Microsoft has instead focused on organic development and says it plans to roll out its own search engine later this year.

Data sourced from: The Washington Post Online; additional content by WARC staff