There has been a lot of discussion recently about Microsoft’s bid for Yahoo and subsequent bid withdrawal, followed shortly thereafter with talks of the possible acquisition of Yahoo’s search business. All of this hullabaloo begs the question, why? And the obvious reason is that Microsoft, and even Yahoo for that matter, lag considerably behind Google in the paid search advertising market. By buying/merging/acquiring Yahoo, Microsoft intends to give Google a run for its money.
I’m not sure anyone actually believes that this is possible, but more importantly does it even matter? The value of advertising online has been clearly realized by all involved, especially Google the dominant market leader. Why spend the billions of dollars and years of restructuring and R&D to take on an adversary well entrenched with a high ground position? If it was up to me, I wouldn’t. Instead I would rethink, regroup, and innovate. Forfeit the paid search empire to Google and move on to the display search market. Just so everyone is on the same page, a display ad is a graphical advertisement. It can be a static picture ad, video, or multimedia presentation. They aren’t dependent on what someone searches for, but rather are delivered by the content on the page someone is viewing or preferences the browser/site has cataloged about the user. In other words, highly targeted, pretty ads.
The paid search advertising market is still growing at an incredible rate, it’s expected to double by 2012, but display advertising is expected to triple in the same time frame. And right now there is no obvious leader in the online display advertising market. Display marketing will also attract brand marketers with extremely deep pockets, who right now have no real place in paid search. Companies like Budweiser and Coca-Cola.
There is a tremendous opportunity here for Microsoft to impose its still significant will and really capture an emerging market. Based on their track record I’d have a hard time betting in their favor, but the opportunity is there nonetheless.
So, To: Microsoft, shift your focus to display adverts and beat Google at their own game, only this time it’s a little more colorful, engaging, and altogether prettier game. Also, it’s a game you have a chance at winning.