For Microsoft, Will Bing Ring In Their 2010 New Year?
In my May 26th blog I offered up a number of predictions around search and content management. I suggested that Microsoft would need to buy Yahoo to maintain or grow its market share which at that point stood at about 8%. Google is over 60% and Yahoo about 20%.
As most of you probably know, Microsoft, up until a few days ago, had been using its Live Search engine with MSN. However, Live Search from Microsoft has been in a bit of classic web branding quandary as livesearch.com is owned by Tyler Tullock (not Microsoft) who is trying to retire on the ownership of that domain name by either selling it to Microsoft or getting compensated by driving traffic to Google (and to be fair, he did own the domain first). On the enterprise search side, Microsoft leads with FAST, the engine they also purchased about 18 months ago – but FAST doesn’t appear to play a major role in their consumer oriented approach – at least at this time.
The big money and market share play is around consumer search and Live Search at least had little or no brand or market control compared to Google or Yahoo. So Microsoft, in its quest to gain a share of search player status, has been investing in their latest incarnation of search which we know is branded as Bing. Bing now has its own website, name and look and feel.
Accordingly Microsoft has been investing heavily in promoting Bing, I believe to the tune of nearly 9 figures – a hefty sum these days for advertising and promotion. But what’s the alternative? According to their Q3, March 30, 2009 financials, overall revenue was down 6% and online advertising revenues took a double digit drop of 13%. So it makes sense that Microsoft needs to know if they can build a competitive market in search in the near future and the timing is hopefully propitious for them as they enter their new fiscal year.
How will Microsoft know if Bing is successful? That question was posed last week to Scott Howe, Microsoft Corporate Vice President, Advertiser and Publisher Solutions Group, during Federated Media’s Conversational Marketing (CM) Summit in NY. His company, aQuantive Inc., was bought in 2007 for something like $6B, so it was no surprise that he had his own Mercedes limo driver parked out in front of the Hudson Theater in NY waiting for him (on 44th Street in the theater district, that is usually reserved for real entertainers).
In any case, he was asked how much he thought it was worth to Microsoft for a percentage point gain in market share (paraphrasing of course). Obviously, and as he replied, Microsoft is not looking for incremental gains, but something that elevates them into the high teens and beyond. Anything else in the big picture is probably a failure (my comment – not his).
So if Bing booms, then Microsoft scores big time. It will likely eat into Yahoo and Google’s market share, causing at least for Yahoo a further decline in value –something that they can ill afford. And what a great way for Microsoft to start the New Year. On the other hand if Bing bombs, then Yahoo’s stock possibly increases making it both more expensive and probably more imperative to get back into negotiations with Yahoo. In either scenario, Microsoft should know by the end of their Q1 which direction the market wind is blowing.
Bing already seems to be picking up some early momentum (several percentage point increase in market share) and the search engine and its interface have some pretty nice features. The question is whether it’s enough to get people to migrate and stay migrated.
