With its search-engine deal with Yahoo approved by regulators, Microsoft is gearing up for another run at challenging Google's commanding market lead. But with comScore reporting Yahoo and Microsoft had 17 percent and 11.3 percent shares of the U.S. search market in January, the partnership will need to do some heavy lifting to dent Google's 65.4 percent share.
Still, Microsoft CEO Steve Ballmer said he thinks the deal with Yahoo will greatly improve the relevance of advertising placed next to search results, which benefits advertisers and users alike.
"The relevance of advertising depends heavily on the density of bids," Ballmer told the Search Marketing Expo West this week. "And the ability to put together Yahoo's volumes and Microsoft's volumes and use that in a way that improves the experience more -- let's call it all involved parties -- we think is absolutely fantastic."
A Lot of Work To Do
For advertisers, Ballmer noted, the Microsoft-Yahoo deal means more eyeballs in one campaign. "On top of that, we think there's a huge advantage to scale, just in terms of our ability to get more signals [and] do more tests," he added.
What's more, Ballmer thinks the greater scale and volume from the deal will help Microsoft improve the relevance of results for search-engine users. He also expressed confidence that Microsoft will find game-changing opportunities by innovating in the areas of mobile phones, social networking, and real-time computing.
"We may only have our little 11 percent market share, but ... we've been hiring a lot of great people and we're trying to continue to push forward with great ideas," Ballmer told University of Washington students Thursday.
Still, Ballmer admitted that Microsoft hasn't figured out how to refashion its business search model. "We've done some experiments with Cashback and some other things, but we think there's a lot of [room for] innovation and maybe some game changing on -- let's call it the business side -- in addition to the user experience."
Microsoft's CEO refused to speculate as to when, or if, Microsoft will be able to surpass Google and become number one in the U.S. search market.
"A fair degree of realism is required about where the current state of affairs is," Ballmer said. "Even when you pool the volumes from us and from Yahoo, we've got a lot of work to do, and it's a really competitive market."
Betting on the Cloud
Ballmer said Microsoft is betting heavily on cloud computing as the next step in the Internet's evolution with the greatest potential for introducing innovations impacting all aspects of the web experience.
The cloud presents an opportunity "for literally any small creator to create a piece of content, create a piece of software, to have it available instantaneously anywhere around the globe," Ballmer said. As a result, he expects to see "more and more advertising infrastructure to support those small creatives."
Ballmer also predicted that the cloud will enable further enhancements to social interactions by bridging the divide between what people want to do socially and what they do professionally.
"The degree of innovation that will continue to go on" will be "in the area of helping people connect with one another and connect in various personas," Ballmer said. The cloud will wind up "being the place of innovation that lets us pull our lives together the way we want to, to touch people the way we want to [and] to find people when and how, and [in] the way we want to."
Image credit: Product shot by Microsoft.
Posted: 2010-03-08 @ 12:18pm PT
Haha! It's funny hearing Microsoft talk about "innovation" when all they do is copy ideas from others and improve them.