Microsoft Hires New Ad Agency, Revamps Zune Marketing

Microsoft has turned the primary responsibility for Zune advertising over to McCann-Erickson, at least doubled their advertising budget, and dumped the social networking theme of the Zune in an effort to challenge the Apple iPod, according to Advertising Age on Monday.

"Good luck," wrote Alice Cuneo for Advertising Age.

Microsoft spent US$9M advertising the Zune in 2006. As a result, the Zune achieved 10.8 percent of the over $250 hard drive based music players compared to Appleis 86.1 percent. Overall, Zune has 2.2 percent market share for all MP3 players.

Even more worrisome is the fact that SanDisk and Samsung players are gaining ground in the $100 to $200 market. "In the past year, the market has taken a dramatic shift to Flash-based devices, which are less expensive and smaller," said Ross Rubin, with NPD.

In reaction to all of this, Microsoft has already doubled their 2006 budget, and spent US$17M in the first six months of 2007, according to TNS Media Intelligence.

The new marketing campaign sets aside the idea that the Zune is a more social device because of the way it can beam music between Zunes. The new ad campaign, focused mostly on TV in shows like Comedy Central, Greyis Anatomy, and Desperate Housewives, has the theme "You Make It You."

"We are very much aware of the strength of our competition, but once our company gets into something, it will not give up," said Chris Stephenson, general manager of Microsoftis Entertainment Global Marketing. "Itis good being in the Number two place -- we can fight the good fight."

The modest market share was described by Mr. Stephenson as a huge opportunity for the Zune.