The Wall Street angst over Microsoft’s big bet on Internet search and advertising has given rise to a good deal of examination of how well Microsoft is doing in that regard. Are they building a powerhouse competitor or a Moogle (Microsoft’s inferior copy of Google)?
Microsoft, of course, would have us believe it is the former as they roll out adCenter which spices up Internet ad sales with viewer demographic information:
Microsoft’s adCenter, for instance, will incorporate a wealth of user demographic data into its ad-matching equations. Unlike Google, Microsoft knows a great deal about its customers. More than 250 million users have provided Microsoft some level of personal info, such as gender, age, and Zip Code, when signing up for various MSN services, such as a Hotmail account. Microsoft will lay this demographic data on top of contextual ad matches with the hope of providing a radically improved result. Microsoft insists that no personally identifiable info will be disclosed.
Instead of simply bidding on words and phrases, MSN is betting that some advertisers will offer a larger payment if the Web surfer falls inside its target audience. For instance, Kentucky Fried Chicken (YUM ) could target women between 35 and 45 at dinnertime with hopes they’ll opt to buy a bucket of thighs and breasts instead of cooking. Or Neutrogena Corp. (JNJ ) could target one set of ads for its facial cleansers for men and another for women. “Search is a very, very blunt instrument,” says Joanne Bradford, vice-president and chief media revenue officer at Microsoft. “AdCenter is a tool that you have much more control over.”
Frankly, if that’s it, adCenter is hardly razor sharp. Google, of course, is relying on IP address location and search history to refine its results.
Henry Blodget is clearly in the Moogle camp in his blistering attack, MSN: Another Quarter Closer To Irrelevant:
Microsoft has been at the web business for 11 years now–and it is still running a distant third. How long Microsoft will continue to believe that gaining real traction online is just a matter of hiring the right people, developing the right algorithms, or spending the right amount of money remains a mystery. Unless the MSN division soon shows signs of first stabilizing and then regaining share, however, even the Microsoft faithful may eventually have to throw in the towel.
He recommends a spinoff as was the ultimate fate of other Microsoft Web properties such as Slate and Expedia, although it’s not clear how that would boost MSN in the search business as opposed to ensuring its doom.
However, on the flip side, Microsoft may have some advantage in just not being Google. The rumor from a week ago that eBay was soliciting help from Microsoft and Yahoo in fighting Google was subsequently denied by Steve Ballmer, but choosing an ad vendor for a content site seems like an ordinary business decision that could expect to be examined regularly. The conjecture that eBay management was incensed by Google’s recent forays into shopping might play a part in any decision, but neglects the fact that Microsoft and Yahoo have notable shopping sites of their own.
More concretely, Microsoft did manage to snag a search client away from Google over the weekend. Amazon’s A9 and Alexa searches are now “powered by Windows Live” :
Jeff Bezos hasn’t had much luck finding a winning recipe for entering the Web-search market. His previous formula — pluck an algorithms guru from Yahoo, add search results from Google, and stir up the Web world — didn’t attract many users. Meanwhile, Udi Manber, CEO of Amazon’s search subsidiary, has decamped for Google. Now Bezos is giving it another go by partnering with Microsoft. While Amazon’s move doesn’t do much for Microsoft’s paltry share of the search market, it’s a symbolic victory for Microsoft, which failed in a bid late last year to power AOL’s search results.
Amazon’s search properties are small potatoes (and ad-free), but something is better than nothing. As Nicholas Carr observes:
As Google has moved deeper into shopping services and book sales, it’s been on a collision course with Amazon. But my guess is that money was probably more important than strategy in this decision. The big question: What did Microsoft pay, and is this part of a larger deal? No word yet from the principals.
Once again this seems like an ordinary business decision where Microsoft can provide an alternative to the ubiquitous Google, although the current lack of ads makes it a special case.