News

Microsoft's Search Engine Marketing Push

• By Michael Desmond
• January 13, 2006

It may seem like Microsoft has scaled every peak, but the software giant is playing an important game of catch-up with Yahoo! and rival Google in the area of search engine advertising. If Microsoft hopes to achieve its vision of services-based applications like Office Live and Windows Live, it needs a way capture ad dollars and produce viable revenue streams.

That's why Microsoft has spent more than a year honing its adCenter search engine marketing effort. As a direct competitor to Google AdWords and Yahoo! Overture, adCenter promises to bring pay-per-click (PPC) advertising to the next level. The program, currently in beta, is expected to formally launch in June.

"I know that people using the beta now love it," says Barry Schwartz, CEO of RustyBrick, a Web service firm specializing in customized online technology. "The features in MSN adCenter are very, very powerful in terms of demographics."

The ability to deliver fine-grained demographic data -- ages, location, interests -- is a major leap over the current state of the art, says Nate Orshan, marketing lead for e-commerce consultancy Bock Interactive. "Currently neither Yahoo! nor Google can offer the level of demographic targeting that they are offering."

It will take a sustained effort for Microsoft to ween companies away from the Google AdWords habit. According to a report from Internet monitoring firm Hitwise, 11.1 percent of all shopping and classifieds site visits in December came through Google, up 28 percent from the year before. Yahoo! Search produced 4.05 percent of the December traffic, while MSN Search was credited with just 0.79 percent.

Orshan is not surprised at Google's prominence. "It is the first tool that [merchants] reach for when they starting thinking about marketing their site. As a consulting firm we are driven by our clients' demands. Our clients are demanding Google, for the most part, and a little bit of Yahoo! But MSN/adCenter? Not at all."

That should change once the adCenter program is plugged into MSN. Microsoft has been contracting with Yahoo! for search engine marketing services, but that contract runs out in June. Not coincidentally, that's the launch timeframe for adCenter. "If an advertiser wants an ad on MSN, they have to sign up."

Orshan agrees that MSN alone should help deliver a critical mass of consumers to the adCenter program. But with Microsoft already discussing things like video hyperlink ads -- where a displayed product invokes a relevant link -- it's clear the software giant has set its sights high.

"It's not just a hobby or sort of a side project to them. I think it is really a strategic initiative that takes aim at the current success that Google and Yahoo! are having with their pay-per-click marketing. If it works the way it is advertised, [adCenter] should one-up them."