Monday, March 21, 2005

Microsoft Tries To One-Up Google And Yahoo

From USA Microsoft to launch paid search technology .

SEATTLE — Following the lead of Google and other online competitors, Microsoft plans to start selling sponsored links on its search Web pages.
Microsoft's move into this potentially lucrative area capitalizes on detailed demographic information the software company has gathered over the years, raising privacy concerns for some.

What most people fail to realize is that when they surf through the course of a normal day, they create more cookies on their computer than a Keebler factory.

Microsoft's paid search platform will provide detailed — but not personally identifiable — information, such as gender, age and location, for many people who use its search engine, allowing advertisers to target their ads to a specific audience.
So advertisers will be able to do a better job of catering to their potential customer?

Yusuf Mehdi, a corporate vice president with the MSN unit, said Microsoft has gathered this personal information by tracking users who have logged into its Hotmail e-mail program or other Microsoft Web sites, and then matching the data they provided with publicly known demographics, such as average income for a particular ZIP code.

The company uses computer addresses to track who's who, but Mehdi said it will not release names or other personally identifiable information.

For example, a car company could choose to have Microsoft display its sports car link when a man types in certain keywords, and a link to an SUV model when a woman uses the search criteria.

The only pitfall I see here is that an advertiser places an ad next to search query that is not relevant to the search. In this case you have abused the "trust" and are now just advertising based on demographics, not the search query.

Microsoft would then provide the company with detailed information about the demographics of the people who clicked on its ads.

Here's the troubling part, what does MSFT consider "detailed"?

Microsoft has made its name selling software, he said, and the new model of giving a product away and making money from advertising requires a steep learning curve.

Microsoft also has not yet done a good enough job of showing consumers why its MSN search engine is different enough from Google's and Yahoo's to warrant switching loyalties, he said.

There's an understatement.

"Microsoft is going to have to differentiate or MSN Search as a destination for consumers to come to," Garrity said.

Microsoft's paid search effort will be unveiled Wednesday at the company's annual MSN Strategic Account Summit, geared toward the online advertising industry.

I wonder if this trademark issue will be addressed. Advertisers are your bread and butter and you must accomodate them. There's a happy medium, do you want to know how?

At the same event last year, Microsoft Chief Executive Steve Ballmer conceded that one of Microsoft's biggest missteps was not to use its in-house research and development staff to create a proprietary search engine earlier.

"That's probably the thing I feel worst about over the last few years — not making our own R&D investment," Ballmer said then.

Why not tackle the next big app for the Internet, local search. The advertising dollars will be endless and it can be your transtition to mobile search. There's an easy way to do it.

At this year's event on Microsoft's Redmond campus, speakers include Google CEO Eric Schmidt and Barry Diller, CEO of IAC/InterActive. But in a switch from previous years, Microsoft is not allowing journalists to attend the meeting.

I imagine the conversation between Bill Gates and Steve Ballmer went something like this. "Geez Steve, this year don't let any of Scoble's crazy blogger buddies in, we might actually get some constructive criticism"

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