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Microsoft doesn't want Zune lost in the Shuffle

The software maker is considering upping its ad budget as it tries to take on Apple's iPod. Photos: Looking for Zune

Trying to catch up to the iPod is an expensive proposition.

To tout its Zune, Microsoft launched a marketing campaign on par with that for the original Xbox. But now that the music player has spent a month on the market, the company is considering increasing its advertising to attract more attention to it.

"We are talking about upping that spend a little more," Marketing Director Jason Reindorp told CNET News.com last week.

Microsoft debuted the Zune to mixed reviews last month. The device had a strong initial sales week, but has dipped in sales rankings since that point, according to market tracker NPD and online retailer Amazon.com's sales chart.

And many of those first-week buyers were probably from the hard-core gadget enthusiast crowd. They're not the young hipsters that Microsoft is hoping to convince to buy the Zune and "squirt" songs with their friends--Microsoft's term for sharing music files over the built-in Wi-Fi connection.

To woo that set, Microsoft has been pitching the Zune in TV spots, outdoor ads, print ads and online promos, mainly trying to get into the heads of those aged 18 to 28. But even with a decent size marketing budget, Microsoft knows it may need to buy more ads to try to get the Zune better known.

The company's initial goal was to have its ads reach about one quarter of those in its target age range, and reach them at least three times. It has TV ads that have run in shows like Prison Break, Family Guy and Grey's Anatomy, and has inserted print ads in magazines such as Scratch, Paste, Spin, Vibe and Rolling Stone. There are also online ads on sites like AOL, Billboard and MTV, as well as on Microsoft's own MSN site.

Zune found

Microsoft said it isn't trying to compete with the level of "noise" generated by Apple Computer's iPod advertising.

"We recognize that Zune cannot expect to compete for mass market mindshare on the same level as iPod in the short-term," Peter Kingsley, group manager for Zune brand marketing, said in an e-mail. "Striving for this would be fool-hardy."

Kingsley said the company's goal is to launch the Zune brand and focus on with wireless sharing ability. With its ads, he said Microsoft wanted to stand in "stark contrast" to the iPod.

"A key principle to our advertising creative is authenticity, in that the Zune brand is about celebrating great artists and the real people that enjoy it," Kingsley said.

Still, NPD analyst Ross Rubin said, Microsoft is taking a somewhat lower-key approach than its better-known rival.

"The focus has been a bit more understated than a lot of Apple's advertising," Rubin said.

New landscape
In part, the different strategy makes sense, Rubin said. When it started pitching the iPod with its bold silhouette ads, Apple was trying to educate people about the whole notion of a digital music player. "Microsoft, coming into the market so late, needs to focus on differentiating from the market leader," Rubin said.

The company also may be waiting until it has a broader story to tell. Right now, it has only one hard-drive-based model on the market, and it still doesn't have a store to sell videos.

"As the product portfolio builds out, we may see the imagery in the advertising become more aggressive, particularly as their target audience broadens," Rubin said.

Microsoft said last week that it expects to sell more than 1 million Zunes by June, the end of its fiscal year. To get that total, the company estimates that it will nab between 10 and 15 percent of the market for music players with 30GB or more of storage.

Still, even if it reaches that level of sales, Microsoft still regards Zune as a long-term effort that will take years and cost hundreds of millions of dollars.

For now, Microsoft plans to continue targeting the same age range, but the company is open to tweaking things the campaign it finds it needs to broaden or change its demographics.

"We'll obviously keep a close eye and, if we need to or want to, we'll shift focus," Reindorp said.