Xbox launching interactive ads with Toyota, Unilever, Samsung

Microsoft Corp.'s Xbox 360 video game console will launch interactive ads on TV this fall in a bid to steal more business away from television networks.

The tech giant has signed Toyota, Unilever and Samsung Mobile to its offering, called NUads, which will debut this fall. People who use the Xbox to watch video via apps from Microsoft partners -- including ESPN, TMZ, NBC News and the UFC -- will see the new ad formats.

In their first iteration, the NUads will let users vote in response to questions asked in the ads. Toyota’s spots, for instance, will ask users what other devices they would like to see “reinvented” the way the company has “reinvented” some of its auto models.

Users can vote by clicking a button on a controller or speaking or gesturing with their hands when using the Xbox 360 add-on called Kinect that includes a camera and microphone.


Toyota will then have access to the data on how people voted and demographic information on the voting blocs.

Microsoft is aiming to charge what Ross Honey, general manager of entertainment and advertising for the Xbox Live online service, called a “premium” compared with typical commercial rates.

“There have been interactive ads on the Web before, but the beauty of it is that we’re bringing that to the TV,” he said. “It’s a substantially more valuable ad product.”

Unilever plans to use NUads to promote its Axe body spray line.

Stealing a significant chunk of the $68 billion U.S. TV advertising business will be a huge challenge, given the sizable audiences that can be aggregated at a single time on traditional TV, not to mention major advertisers’ conservative tendencies.

But as more marketing executives become comfortable spending big money online, Microsoft hopes it offers an attractive middle ground by putting the benefits of the Web on a TV screen.

It’s part of a larger move by Microsoft to take viewing time away from cable and satellite services by making the Xbox 360 the most popular device for getting video into the living room from the Internet. The strategy was a primary focus of the company’s news conference at the E3 industry event last week, at which it premiered new partnerships with Univision and the NBA, among others.

Microsoft’s ad revenue on the Xbox 360 has grown 140% from the same period in 2010, Honey said, though he declined to specify the total amount. “It’s small for us but in the context of most companies it’s substantial,” he stated. “We’re well ahead of just a few million dollars a year.”

Xbox Live has more than 40 million subscribers. Microsoft has not specified how many use the video services that are part of NUads, but has disclosed that its online users spend more than half their time streaming video and music rather than playing games.


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