It's not just about how many people view an ad. It's the audience take-away. If you reach 700,000 people with a message that says that "Microsoft is stodgy and out-of-touch" then the ad is clearly not effective. Based on what the bloggerati and marketing pros are saying, I would suggest that the ad campaign is a failure based on the message it delivers. The fact that it's reaching so many people with that negative message means it's a spectacular failure.
This really comes down to the old "there's no such thing as bad publicity" argument: was the campaign a success just because everyone is talking about them?
The fact that the "I'm A PC" ads only drew half the audience as the Seinfeld/Gates ads suggest that the world would rather gawk at Microsoft's epic marketing failure than learn more about the qualities the "I'm A PC" ads tout of Microsoft itself.
In this case, is there such a thing as bad publicity? The answer would be yes.