For several years, Microsoft has been raking in record profits based on tremendous revenue. You might not believe Microsoft needs to cut costs as it bounces from one profitable quarter to the next. However, the corporation is cutting costs by ceasing all TV advertising.
Variety foreshadowed this move in a previous piece. According to the report, Microsoft did not attend the TV upfronts. This suggests the corporation chose not to purchase network inventory, which would have resulted in lower pricing. In other words, Microsoft was intending to reduce its TV advertising this season. This is a period when TV broadcasters and commercial broadcasters are haggling over ad kinds and costs.
According to the insiders, brands like Xbox and Surface will continue to be marketed. These will be handled by IPG’s McCann in New York, a long-time ad partner. Nonetheless, Microsoft’s cutback has had an impact on the company. According to sources, IPG’s McCann was forced to transfer personnel from Microsoft to other accounts to prevent layoffs.
Microsoft, on the other hand, says it will continue to collaborate with McCann:
“Microsoft is dedicated to its cooperation with McCann and grateful for the excellent job they have completed.” “We are examining how to deploy media expenditures like we do every year. However, this has no impact on our partnership,” a Microsoft spokeswoman said.
In 2021, Microsoft invested around $ 294.8 million in TV advertising. Microsoft’s businesses, such as Xbox, will continue to market on television by the IPG agency that previously represented them.
Why Did Microsoft Stop TV Advertising?
Depending on the risk, the corporation may cease displaying its advertisements to save money when home prices decline. According to three unidentified sources within the firm, Microsoft will discontinue showing advertisements. The news comes after Variety News Agency reported that the corporation did not purchase pre-broadcast commercial time, i.e. before the advertisement aired.
“We have no more information,” Microsoft sources told Browns.
According to a source close to the firm, the company lowered advertising expenses as a result of rising interest rates in the country and damage to the supply chain to avoid having to lay off staff.