Microsoft's Advertising Unit Shuts Down Global Agency, Creative Team In Latest Layoffs

Microsoft's latest round of layoffs includes the shutdown of two key teams in its advertising division, sources familiar with the matter told CRN Thursday.

Microsoft Advertising has shut down its Global Agencies and Accounts team, which handles Microsoft's relationships with top media and creative agencies, and marketers.

The Global Agencies and Accounts team was led up until recently by Vice President Stephen Kim, who joined in February 2013. Kim recently returned from leave and is now with Microsoft Advertising's Trade Marketing team, sources said.

Microsoft has also shut down Yarn, its specialized creative team in charge of keeping advertisers up to speed on the software giant's latest advertising platforms, sources told CRN.

[Related: Microsoft Searching For New US Advertising Sales VP As 8-Year Vet Lorizio Departs]

Microsoft, on its website, describes Yarn as "a creative group that collaborates, ideates, incubates and customizes highly immersive ad experiences made possible by Microsoft technology."

It's not clear if the employees in these groups were laid off or reassigned to other units, and Microsoft couldn't be reached for comment.

Microsoft Advertising focuses on ad sales on MSN, Windows 8, Skype, Xbox, Bing and Outlook.com.

Sources said the shutdown of the teams could impact Microsoft's ability to compete with Google and Facebook in the online advertising market.

Microsoft accounts for between 2 percent and 3 percent of the global digital ad market, compared to 31 percent for Google and 8 percent for Facebook, according to eMarketer figures cited in an AdAge report earlier this month.

In Microsoft's fiscal 2015 first quarter, online advertising revenue grew 14 percent to $129 million compared to last year's quarter.

Search advertising revenue jumped 23 percent due to solid Bing growth, but display advertising revenue fell 9 percent due to "continued portal traffic and monetization declines," Microsoft said in a filing with the Securities and Exchange Commission.

Meanwhile, Microsoft Advertising recently filled a top leadership spot that had been vacant for the past eight months, hiring Bob Bejan, chief development officer at public relations firm MSLGroup, as vice president of North America sales and marketing.

Bejan takes over for Keith Lorizio, an eight-year Microsoft veteran who was shown the door in January.

Bejan, who started Oct. 27, told AdAge he plans to show media buyers that Microsoft is committed to advertising.

"I think the need is making sure people understand how serious Microsoft is about the ad business," he told AdAge.

Microsoft said its latest layoffs were primarily in finance, human resources, marketing and support, and MSN.

"We’ve taken another step that will complete almost all the 18,000 reductions announced in July," Microsoft told the Seattle Times in the statement, adding that the cuts are "spread across many different business units and many different countries."

PUBLISHED OCT. 30, 2014