Over at B|Net our friend Jake found some information regarding the Microsoft Plan that somewhat states that the move they made is not so stupid.
We have to disagree, and disagree in a big way. We think that MSN moving to a ‘pay per performance’ is an act of desperation. See the problem isn’t with their business model, because honestly they don’t have one. At the end the problem is that no one uses MSN, they offer nothing unique and their search results are what many deem ‘terrible’.
I interviewed with Microsoft in 2003 to ‘fix their MSN problem’ , to put it in the best possible way… I told them if they continued down this path they will have 5% market share within 5 years… That was 5 years ago… and they now have about 5% market share.
Fixing their PPC issues is not an issue when you have no traffic to click on the ads in the first place. The problem is (and was) that there is (and was) no compelling reason to use MSN over Google. Period.
Needless to say I wasn’t hired, however with almost a Pyrric Victory feel to it, the fact was I was 100% right. The Pyrric Victory is that now 5 years later we have Google near monopoly status where they can dictate what the market wants.. rather than vice versa.
Some of the problems that were presented to be were actually stunning and huge issues. At the time they admitted they were technologically lacking in the face of the then growing Google threat. They said that at the time their PPC system was still in it’s infancy and wanted to push the advertising industry towards a ‘flat pay per sponsor keyword’.
I informed them that MSN doesn’t have the traffic or industry clout to change anything, this isn’t the desktop we are talking about, this is online.
The problems don’t sit with their PPC business model, but the fact is that the problem sits much higher than that, their results and overall approach to online. The fact is at the time Microsoft had no online strategy, and as it appears they still don’t.
Microsoft kept stating during the interview that it was ‘Google that was the concern’ but Google wasn’t the concern, it was Yahoo!.
If you look at MSN’s vs Yahoo! vs Google you will see right away. Yahoo! and MSN are all about Brittney Spears… Google is all about search.
I told them if they were to compete against Google they need to stop taking on Yahoo. They didn’t like this… not one bit. It was like trying to convince a speeding Mack Truck stop on a dime.. it just wasn’t going to happen. Someone there made a bad decision an the whole company was going down with it.
I informed them that if their search wasn’t going to meet up to visitors standards, they won’t have a search engine with any significant market share to change anything in that market.
Their reply was ‘that would be beyond the scope of your duties, you just need to make sure that WPP will adopt our method rather than Google’ … when I told them that the reason WPP or any agency won’t adopt this method is because MSN doesn’t count in the scope of things and within 5 years it will have 5% market share if this continues, so if you want me to ‘fix the problem’ I am going to have to have some leeway with this. Otherwise short of a miracle no one on earth can fix this problem, because the problem isn’t the PPC business model it’s the entire business model.
The funny thing is they did hear me, because shortly afterwards they attempted http://search.msn.com … but this needed to be their main site back in 2003 … along with good results… both didn’t happen.
Some of the problem stems with their infrastructure, I hate to say it… and I am sure some people will disagree (this was NOT brought up during the interview) but it’s my belief that Windows just isn’t ready for a massive deployment in a hosting environment. For your desktop is one thing, but for your hosting solution to host one of the largest search engines on earth?
There is a reason both Google and Yahoo choose a Linux / BSD based hosting environment and though money of course was part of it… it wasn’t the overall deciding factor. It was scalability, reliability and speed — the three major areas where Windows lacks… Now I fully understood it’s not reasonable for Microsoft to use a Linux deployment for MSN… (though if they purchased Yahoo that would be interesting to see how they manage that.. since Yahoo uses an Opensource platform rather than Windows).
However infrastructure aside, the key problem that MSN had and still does have it literally horrific results.
Some common searches you expect one thing.. but get delivered something else entirely. In short their results are years behind where Google is today. In order to generate traffic and ad revenue you need traffic to the site. In order to get traffic to the site you need a compelling reason to use that site.
People use YouTube because they want the videos
People use Ebay because they want an auction
People use Google because they want to search
People use Yahoo! because many of them want their Yahoo! mail .. or Yahoo! movie times..
The only reason people use MSN is because it is their default browser on IE and they didn’t know how to change it. These are the same people that still run around on IE6.
97% of our Microsoft Employee visitors come in from Google search
That is the state of affairs… the solution Microsoft isn’t to Fix your PPC model, the solution is to fix your business model overall.