The Race Is On: MSN Raises Stakes In Search Advertising

Microsoft executives, detailing its new MSN paid search system last week, made clear it was just a first step toward a complete online advertising platform that uses demographics and search to target specific audiences across a variety of MSN interactive media.The MSN paid search system, which is still in development, deviates from the path set by search market leaders Google and Yahoo! by showing advertisers aggregate audience profiles for keywords to aid campaign planning. Industry analysts expect the system to be introduced in the U.S. by the end of the year.MSN's use of audience profiles has the potential to further meld search with other online ad vehicles and ignite an innovation race with Google and Yahoo! to make it easier for advertisers to run integrated campaigns aimed at specific consumer groups."It's not about clicks," said Joanne Bradford, MSN's vice president and chief revenue officer. "It's about giving people data and insight into the audience they're reaching."MSN's search ad system creates audience groups by combining user information from Hotmail and other MSN registrations, and third-party lifestyle data sources. A florist, for instance, could see that searchers for "roses" are 60 percent male and often fall in high-income brackets. Advertisers could also target their campaigns based on geography and time of day. Though MSN will not initially let search advertisers customize ads to specific audiences—such as a florist showing one ad to men and another to women—it left open this possibility. Peter Hershberg, managing partner at Reprise Media, a New York search marketing firm, said that, as described, the audience emphasis would "put brand marketers into an environment they're much more comfortable with." The paid search system is a plank in a larger platform called MSN adCenter, which Microsoft said would allow advertisers to target consumers throughout the buying cycle. "It's clear that they see that search and display media should not be managed separately," said Jeff Lanctot, vice president of media for aQuantive-owned Avenue A/Razorfish, "and they are building a bridge between those two strategies."Catching up to Google and Yahoo! is a top priority at Microsoft, which currently draws about 16 percent of all searches, trailing Google's 35 percent market share and Yahoo!'s 32 percent, according to ComScore Media Metrix. The new competition could spark more innovations in search advertising systems, which have seen far fewer developments compared to Web search. "Now we're seeing big companies with big resources think a lot about what the advertiser's day is like and how to improve it," said Chris Churchill, CEO of Fathom Online, a San Francisco search-ad agency. Google and Yahoo! are also sitting on large amounts of audience data that they could tap to target search and display ads. Google, though it has little registration information, has reams of Internet user behavior collected by its search toolbar, which the company will only say is used by "millions," and a sprawling ad network. The company declined to comment on any future plans for the data.Yahoo! has a vast trove of audience information, thanks to its 165 million registered users. In December, Yahoo! hired Usama Fayyad, a data-mining expert, as its first chief data officer, charged with determining how the portal's data can best be applied to advertising while respecting consumer privacy. "Yahoo! has a tremendous amount of information to tap into," said Steve Mitgang, senior vice president at Overture. "There are clearly things about consumers that come to Yahoo! that advertisers would really be able to leverage."Many industry analysts expect MSN to initially mingle its listings with ads from Yahoo!'s Overture unit, which has a non-exclusive paid search distribution deal with MSN through June 2006. Before launching in the U.S., MSN will test the system for the next six months in France and Singapore. When detailing the program, MSN's Bradford said, "I wouldn't underestimate the power of audience profiles for marketers."

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The Race Is On: MSN Raises Stakes In Search Advertising

Brian Morrissey

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