Search wars - Round 2?
Is Microsoft's launch strategy for its new search engine 'Bing' going to allow it to encroach on Google's market share? That's the big question. Rumour has it that Microsoft has $100m for its marketing campaign, but Comscore stats for the last 6 months in the US, show market share as being largely static with Google being considerably ahead, and Microsoft significantly behind, so there will be a long way to go to catch up. They might need a bigger boat.
The above graph shows the uplift in search activity on Google for the term 'ask jeeves' in April which coincides with the re-launch and the bringing back of jeeves the butler, so advertising does work in terms of raising awareness of a search engine, but whether that growth is sustainable after the advertising stops remains to be seen.
'Build a better search engine' as a strategy is unlikely to work, even if it is heavily and well communicated to the user. Much of the proposed re-launch and marketing is likely to focus on new features, but if Microsoft thinks it can win audiences back based on features and better results it might be disappointed. Users respond poorly to flashy options and creative interfaces and just want relevance and simplicity and Google has that in spades. I think their marketing strategy will need to go beyond pragmatism. They need to break people's habits, so it will be interesting if they can encourage that to happen.
Even if they do start to be successful, it's unlikely that other search engines like Google will allow their lunch to be eaten, and if it's just a case of ad dollars, then Google has deep pockets. They'll no doubt fork out to defend their turf. Whether that will be an unscheduled expenditure which dents their earnings or not, I'm not sure, but I expect they have a war chest contingency for Microsoft's inevitable confrontation.
Microsoft has its eye on Ad revenue, but needs to secure market share of search to have a viable offering for advertisers and its low reach means that it's a poor choice for marketers looking to buy significant search advertising inventory.
Microsoft gaining market share will also be welcome news for agencies and advertisers who feel somewhat beholden to Google in an industry that needs competition. Marketers like to be able to allocate their budgets across multiple options to spread risk, and feel that media owners want their ad spend. This is something they don't always get form Google. I think some serious competition will encourage new features, options and incentives for advertisers. Google pulled its Best practise funding programme at the beginning of the year, ending an era of agency buying discounts. An act based largely on maximising revenues and not needing to compete for ad spend.
Search engine ad inventory is not infinite, and there's only so much of it. Especially in a recession with many commercial categories finding fewer people actively searching. If Microsoft were to win a significant amount of market share, this would have an impact on Google's revenues, as it fought on 3 fronts declining adspend, the need to potentially offer advertiser incentives, and losing adspend to Microsoft.
Agencies and advertisers may also benefit from increased ad spend possibilities with Microsoft as it still offers discounts to agencies, so an increase in its ability to be a useful and volumous media owner will allow advertisers and agencies to generate more revenues.