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Microsoft Innovates by Cultivating Niche Target Segments around their Strengths

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by Robert Vergara

Satya Nadella joined Microsoft as CEO in 2014. At the time, he understood that his rival Facebook was doing a better job of social media marketing and advertising than Microsoft. Facebook’s social media strategy attracted billions of users to its platforms. Users from around the world browsed Facebook social media sites including Instagram and WhatsApp, and these users were valuable to advertisers because they target huge audiences of potential customers. Having so many users was a windfall for Facebook’s advertising business.

Facebook Is Everywhere

Microsoft CEO Nadella understood the Facebook social media audience was so large that Microsoft could not compete with them in terms of audience size. His competitors’ influence was everywhere. But Nadella also understood that it was not possible to be all things to all people. Nadella created an effective marketing strategy that improved Microsoft’s social media advertising business by effectively targeting the most profitable audiences.

Targeting Niche Communities

Nadella felt that Microsoft could improve advertiser value by focusing on specific online communities. Microsoft purchased Minecraft—which had 140 million active players, Xbox—with its 100 million users, and GitHub—a developer-focused platform with 56 million users.

Although each of these online social communities was not as large as Facebook’s total audience, their users were engaged and active in their online communities, and they were dependent on Microsoft tools and metrics for their needs.

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Growing Market Share

By investing in niche audiences, Microsoft gained a large market share in specific target segments and has the capital to invest in ever-more targeted segments. As Microsoft identified and aligned itself with the multitude of niche communities online, the data collected created hyper targeted market segments that created more value for Microsoft and their advertisers.

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Value for Microsoft and Advertisers

Satya Nadella’s strategy of identifying niche online communities and investing in the valuable data they provide, enabled Microsoft to target specific audiences for advertisers. This innovative marketing strategy identified the most valuable audiences for each advertiser, making them more profitable for Microsoft as well. Nadella sees the future of digital marketing in the critical data that is collected to clearly identify, reach, and convert target audiences. If they belong to a loyal online community this information is easier to access and monetize through social media marketing and advertising.

If you enjoyed this healthy marketing post, read about other successful marketing strategies here.

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