- Microsoft hit the brakes on TV advertising as signs of an economic slowdown mount.
- Microsoft spent an estimated $294.8 million on TV advertising in 2021.
- The move is an early sign of the downturn’s effect on the ad industry.
Microsoft has paused its TV advertising, one of the first indicators of the economic slowdown’s impact on ad spending.
Three people familiar with the matter said Microsoft paused TV ads and related projects for the main Microsoft brand and that it was unclear when they’d resume.
Variety earlier reported that Microsoft planned to sit out the TV upfronts, forgoing the opportunity to buy network inventory in advance to get better rates. Microsoft spent an estimated $294.8 million on TV advertising in 2021, according to Variety, citing Kantar.
Microsoft’s TV advertising was handled by IPG’s McCann New York, whose many well-known commercials for the company included its 2019 “We All Win” Super Bowl ad and “Changing the Game” that highlighted its support for disabled gamers.
IPG’s McCann Worldgroup is still handling other global advertising for Microsoft’s companies like Xbox, and Microsoft will continue to run performance marketing, the sources said. McCann New York is shifting its employees working on the Microsoft account around to avoid layoffs, two of them said. Microsoft spent $1.1 billion overall on global advertising in 2021, according to Comvergence estimates.
“Microsoft remains committed to its partnership with McCann, and appreciative of the great work they have done. As we do each year, we are evaluating how to allocate media dollars, but this does not affect our relationship,” a Microsoft spokesperson said.
One person with direct knowledge said Microsoft made the advertising cuts in the face of rising interest rates and supply chain challenges to avoid layoffs.
The economic slowdown has been hitting tech giants, leading them to enact hiring freezes and layoffs, and marketing is one of the first areas to get cut during an economic slowdown.
Morgan Stanley and the agency Zenith have pared back their ad spending forecasts this month, and some ad agencies have been bracing for big ad spending cuts.
“We have not seen marketing budgets cut yet — and I will stress, yet — but anticipate that this will start happening soon,” an agency exec recently told Insider.