Under the Surface

How do you launch a Tablet? With a ‘secret announcement’ it would seem. Even before its mysterious debut in Los Angeles, Microsoft’s Tablet – to be called the Surface – had the consumer tech world buzzing. Since then, the story has been framed every which way: Microsoft is breaking with its hardware partnerships; Microsoft is launching a full-throttle attack on Apple’s dominance in the Tablet format wars; Microsoft is going to turn its business models on a dime, as Bill Gates did after spending one night surfing this new thing called ‘the web’ in 1995.

However there’s another story, that we can see when we look under the surface. Microsoft’s new Tablet devices could also massively expand the app ecosystem – and with it, the potential for mobile advertising.

Mobile advertising
Microsoft has form with mobile advertising. In 2007, after losing out to Google in its bidding war for DoubleClick, it acquired ScreenTonic, a pioneering mobile advertising company. In one move, it incorporated ScreenTonic’s software, which targeted basic ad delivery, and, equally as importantly, gained access to the subject-matter experts who understood mobile. However, general industry opinion is that Microsoft’s mobile advertising operation has since been rather flat: you could say that ScreenTonic lost its fizz.

That was then, this is now. Today, the mobile advertising market has been valued by the IAB and IHS Screen Digest at $5.3bn (£3.4bn) globally. This is very a big pie, with two huge slices dominated by the major platforms, Google’s Android and Apple’s iOS. This is common industry knowledge, but we also know it to be true, because when we look at Adfonic’s network from the global perspective, we can see that between them, they account for 83 per cent of all our mobile ad activity worldwide, with 45 per cent driven by iOS.

Yet, huge as these figures may be, they are tiny in comparison with the potential Windows user base. According to Windows Web Services VP Antoine Leblond, there are 1.25bn Windows PCs running today. This is significantly more than Android and iOS devices combined, with Apple claiming at its recent WWDC that it had shipped 365m iOS devices, and Google at its I/O Conference indicating 400 million Android devices activated, both figures quoted in June 2012.

Installed base
Never underestimate the power of an installed base. It represents a huge marketing asset, in the form of people who have already bought into a brand. There is familiarity and trust in an installed base, and it can be a strong indicator of the success of future products or services.

So instead of the binary choice between the equally alien environments of Apple or Google, perhaps all Microsoft needs to do is make a secret announcement and produce a Tablet. With a collective sigh of relief, its core audiences will be able to advance to a mobile platform, safe in the knowledge that they’re remaining within the familiar, trusted Microsoft fold.

This isn’t stealing market share from Android or iOS. It’s a newly ‘Tabletised’ audience, whose barriers to going truly mobile have just been removed. If they feel more comfortable with Windows,  they may be more likely to follow Windows into the Tablet format, and massively expand the global mobile advertising base.

And as their barriers to mobile entry disappear, so do the boundaries within their lives. The distinctions will become blurred, between lecture hall and campus, between office and home. With the Surface, the ‘Bring Your Own Device’ philosophy could finally be realised, as people start to reside entirely within Microsoft’s mobile ecosystem. Instead of hopping in and out of operating systems and mobile environments, they stick around. This is not just more consumers exposed to mobile advertising: it’s many more consumers, much more of the time.

Advertising potential
A huge user base; dizzying market statistics; a seamless mobile environment. These are highly combustible ingredients that could lead to an explosion of advertising potential. Because we know that these audiences, using these devices, work for advertising: the Adfonic Global AdMetrics Report identified Windows phones as having up to five times higher eCPMs than average, and Tablet formats consistently outperformed smartphones for mobile ad revenue generation.

So Microsoft’s tablet story really isn’t just about a device, or even partnerships, or format wars. If Microsoft does succeed in unifying one platform across all devices – from Tablets to phones, from desktops to laptops – it will create a seamless environment that will have massive appeal to the biggest installed base in the world. And that installed base would have the potential to more than double the mobile advertising space. All Microsoft lacks still is a mobile advertising platform and capabilities to capitalise on the Windows phones and the app economy.

Mobile app developers, publishers and advertisers, take note: Microsoft is coming.

Paul Childs is CMO at Adfonic