Installed in 05 S4, included microphone is attached to the little middle "visor" just behind the rear view mirror. I've always got complaints from people I talk to that there is a lot of background road noise, so I called my home and office voicemail to hear exactly what they're hearing.

It does sound pretty bad, it sounds like I'm outside riding on a roller coaster talking on my cellphone.

Anyone have recommendations on better placement of the microphone, or is it possible I need a new mic?

PLace the mic above the steering wheel between the guage cluster. Make sure you isolate it from any hard parts so no vibration is transmitted.