At yesterday’s Goldman Sachs Internet Conference, Microsoft’s senior vice president and chief advertising strategist, Yusef Mehdi remarked that he believes that Microsoft is well poised to overtake Google in the online advertising space. However, I’m not certain that their strategy is on target.
Mehdi alluded to the strategy by discussing Microsoft’s recent acquisition of aQuantive and describing Microsoft’s strategy as discretionary advertising–matching an ad buyer with an audience rather than specific pages. Mehdi further elaborated, “We think we have the largest audience to monetize,” when looking across the entire Microsoft suite of products–from Office to Xbox.
This brings up an interesting point — is Microsoft considering ways to integrate advertising across its programs, games, operating system, and search engine? If that’s the case, I think the strategy may be somewhat flawed. As any search engine marketer will tell you, the main reason that search advertising is so successful is because it is a “pull” method of marketing as opposed to a “push” method of marketing. Ads in search are not messages pushed at a general audience, like TV, radio and print ads, but rather allow the searcher to define (via a search query) what messages he/she is actively seeking. How would ads, outside of search, but perhaps along side of Microsoft Word documents, be effective? They’d just be yet another ad annoyance that I’d look to remove — as I’ve successfully done with TV ads through my TiVo.
The search engine has proven to be a very successful, if not the most lucrative, form of advertising for many advertisers. Generally the problem with MSN has not been that it doesn’t produce conversions, but rather that the search volume just isn’t there. In order of conversion success, I’ve found the order of engines to be Google, MSN, and then Yahoo!. For one client, I also found that customers from MSN ads generated more lifetime value than those from Google or Yahoo!. Mehdi also mentioned a similar response from feedback he’s received from MSN advertisers: “When we ask who is the highest ROI search engine for you, clients say the return on dollars spent with [MSN] are the highest, but you need to get more volume.”
But how will MSN get that volume? Through better relevancy. It’s the key to success for a search engine. “Just a 10% improvement answering people’s questions and you change the game on search,” Mehdi said. “This is the opportunity. We are 100% committed to next-generation search experiences. We’re in catch-up mode, but we’ve closed the gap on relevancy. In blind taste tests we’re indistinguishable from the competition.”
He’s right on relevancy driving searchers to a particular engine, but is MSN really more relevant today? I find it hard to believe they are “indistinguishable” from the competition.
I truly believe that any search engine can overtake Google. Google has begun to defocus from its core competency, and that leaves room for someone to build a better search mousetrap. Will it be MSN? We’ll see. The key will be to further improve relevancy — exceed Google — and improve its AdCenter interface with more tools and reporting. Then, perhaps, they will truly have the potential to take down the Google giant in search and online advertising.