Microsoft and Yahoo! compete over who can lose the most talent fastest
November 4, 2008
It’s a war between who can sink their boats the fastest, Yahoo! vs Microsoft, a battle between two second tier search engines. It’s not like Microsoft didn’t see this coming… this author actually offered to fix the Microsoft problem back in 2003., now it’s at the point where 97% of Microsoft Employees come in via a Google Search… so that’s the current state of affairs.
When they aren’t letting each other know how little they think of each other, Microsoft and Yahoo seem to be engaged in another contest: Who can lose the most Internet executives? Full Story
Yahoo and Microsoft will continue to bleed executives, talent and users until they learn that their way is the wrong way…. MSN and Yahoo took the same approach with their search engines that Microsoft did with Vista… all the money into Advertising… none of the money into fixing the real problem.
The real problem is that their search is horrific by Google Standards…. people go to a search engine to search… and until that is cleared.. they will continue to see diminished traffic… and diminished revenues..
This is a contest that actually the winner is unclear on who will lose the most the fastest…..
How we got here - History of MSN, Yahoo and Google
October 14, 2008
People always wonder how Google got where it is today. The history spans about a 30 years and is rich with history. The interesting part is that this is happening all over again, this time in the Advertising Agency world as Ad Agencies are taking the approach that IBM, Yahoo! and Microsoft have taken in the past, either ignoring the problem, or sending the work to a potential competitor.
We will start off with a VERY related history lesson, one that Microsoft taught IBM back in the early 1980’s.
When the IBM pc was being developed at the IBM Entry Systems Division in Boca Raton, Florida they needed an OS vendor, August 12, 1981 is a date for the history books and this date is what will prove to be key for the next several decades.
After IBM negotiations with Digital Research failed, IBM awarded a contract to Microsoft to provide a version of the CP/M operating system, which was set to be used in the upcoming IBM Personal Computer (PC). For this deal, Microsoft purchased a CP/M clone called 86-DOS from Seattle Computer Products, which IBM renamed to PC-DOS. Later, the market saw a flood of IBM PC clones after Columbia Data Products successfully cloned the IBM BIOS, and by aggressively marketing MS-DOS to manufacturers of IBM-PC clones.
Meaning that Microsoft was growing, flush with cash, and grew to be an established name in the industry. Microsoft continued to grow, pushing out new products such as Windows.
Years later Microsoft will launch MSN…. but more on that later in the article.
Yahoo! was founded by Jerry Yang and David Filo in January 1994 and was incorporated on March 1, 1995. The website was nothing more than a directory of sites. Literally a hand edited website that provided hyperlinks to other websites.
Yahoo! grew like wildfire during the initial .com boom and though acquisitions / partnerships and some inhouse coding eventually had a massive product offering and became the most visited website on earth.
It was one of the very first attempts at organizing the internet. It’s initial launch was primitive to say the least, but remember at the time these people were pioneers. They were not only figuring a way to organizing the internet, they were in essence paving the way for others to enter… literally…
Freeze time, move on to Google. (GOOGLE!) yes it’s true, they started with an exclamation point as well.
Google began in January 1996, as a research project by Larry Page, who was soon joined by Sergey Brin, two Ph.D. students at Stanford University in California. They realized that a search engine that analyzed the relationships between websites would produce better ranking of results than existing techniques, which ranked results according to the number of times the search term appeared on a page. The search engine was originally nicknamed “BackRub” because the system checked backlinks to estimate the importance of a site.
How these companies got to where they are today:
Remember earlier it was noted that Yahoo! partnered with companies to offer more services, eventually Yahoo! hired Google to provide search results in 2000, here’s the official release:
Yahoo! Selects Google as its Default Search Engine Provider
Yahoo! to Integrate Google’s Advanced Search Technology into Yahoo!’s Network of Properties
SANTA CLARA, Calif. and MOUNTAIN VIEW, Calif. - June 26, 2000 - Yahoo! Inc. (Nasdaq: YHOO) and Google Inc. today announced they have entered into an agreement that makes Google, one of the fastest growing search engines on the Web, Yahoo!’s® default search results provider. Under the agreement, Google will provide its underlying Web search engine to serve as a complement to Yahoo!’s popular Web directory and navigational guide (www.yahoo.com). Yahoo!, a global Internet communications, commerce, and media company, expects to integrate the services within the next 30 days.
From Google’s official release
That is the press release of death to Yahoo!.. Google was an unknown at the time. It had a dismal market share. No one knew of Google outside of the tech world.. this is comparable to the initial IBM/ Microsoft deal of the 1980’s for DOS. If Yahoo didn’t grow Google, Google would not of existed in it’s current dominate form today. Literally if this deal was not signed back in 2000, the entire landscape of search today would be wildly different. Especially if Yahoo poured resources to developing their own search at that time instead of outsourcing it to Google.
Users started to realize quickly that Google results were identical to Yahoo results, but without the onslaught of Advertising that Yahoo! threw at the users.
900 days later, Google.com was the 10th most visited website on the Internet. What adds insult to injury to this, Yahoo! paid Google to destroy their company.
By the time Yahoo! ended the relationship with Google, Google was armed to the teeth with millions of direct visitors, a valid revenue model and was growing at a geometric rate.
This was bad, but not nearly as bad as what Microsoft did. Microsoft initially ignored the internet.. literally.
There was plenty of lip service from Microsoft, but no action on their part. They viewed desktop Software as the solution, it’s what has worked for them for years prior… and in their view it would be what will work for them for years to come. They even ignored the browser market initially, even though it is a desktop application. Allowing Netscape to become the dominate browser
In 1994, Microsoft didn’t even realize they had their own domain name (the Microsoft.com domain name was registered in May of 1991), directly from Microsoft.Com
Mark Ingalls recalls that when he first typed www.microsoft.com into a Web browser to ensure it hadn’t already been claimed, he was surprised to find a site already there. He traced the site to pioneering Microsoft developer J Allard, who had claimed the server name to test out his new TCP/IP networking stack. The first recorded Microsoft Web server was situated at the end of a hallway in one of the older buildings on campus. Allard agreed to pass the server to the product support group, and it was eventually relocated to a lonely corner of the Microsoft corporate data center.
Microsoft didn’t take the Internet seriously at the time, it was a toy. They only took notice when these companies that launched online were growing at huge rates and their market cap valuations were skyrocketing during the first .com bubble.
The Microsoft Network (MSN) debuted as an online service and Internet service provider on August 24, 1995. They never even thought of being a search engine, they wanted to become an AOL.
At the time most people still used dial up, broadband usage was minimal at best for home use and the vast majority of individuals used a dial up account.
MSN’s marketing approach was to throw up an icon on Windows 95 linking to their MSN network.. and hoped the money would roll in.
That isn’t what happened however.. the adoption rate was far lower than expected.. leaving MSN as a virtually unused ISP whereas Google and Yahoo were developing themselves as a way to organize the internet.
Meaning at this critical time, Microsoft missed the boat.
By the time Microsoft developed their own internal search.. it was really late. Google didn’t have a foot in the door regarding search.. it had both arms, feet, and virtually it’s entire body inside the doorway.
Microsoft launched MSN with their own search technology around 2003 but still using LookSmart for many of it’s listings… almost a decade after Google and well after Yahoo! handed massive traffic levels to the upstart Search Engine.
The search technology was of course inferior and MSN just couldn’t drop the “AOL / Yahoo” look and feel (massive numbers of busy ads) and still plagued with poor search results.
The end result was similar to the initial launch of MSN’s ISP… a virtual failure. Their approach to advertising the search engine was backwards. They spent resources developing advertising campaigns to attract visitors to a horrific search engine, rather than spending those resources fixing the problem… that the search results were overall low quality.
They launched MSN’s $300 Million Ad Campaign then another $100 million dollar ad campaign and then a few various smaller campaigns over the past 4 years.. roughly half a billion dollars spent, even though they were losing $1 billion dollars a year.
What a terrible waste of resources.
The problem wasn’t their marketing or advertising, their problem was their search. It was still horrific. It’s equal to spending big dollars marketing an website that doesn’t work. (As Subway found out)
No one was happy using their results, as their market share continued to plummet. People got more and more frustrated with seeing spam in the results, poor results, or even totally unrelated results.
Microsoft faced a host of problems such as poor search results, poor market share, and poor overall image. Their solution was to spend more money on advertising to tell even more people how bad their search engine was. Hence the problem.
Their approach was so backwards that Microsoft shareholders even mentioned in one meeting that they should “replace” the whole MSN division. The solution was simple however, and they have yet to take it.
The reason MSN’s results are so bad is that it’s subjected to gaming by even years old outdated SEO techniques. They hired way to many PHD’s and not enough SEO backgrounded individuals to point out where their flaws are.
Meaning that if they spent a fraction of that half billion dollars buying SEO firms and retasking them to working on cleaning up MSN by pointing out how they can “game the results” MSN would of been viable as a search engine to market.
However as it stands now, many are reporting Microsoft’s search market share at under 5% for most industries… any action now would be a long, uphill battle against Google. It’s not that it’s impossible, but Microsoft would have to retask the entire mission of the search engine, practically fire the existing team, and replace them with people that have an SEO background.
The problem isn’t advertising, its search.
Some other related tibits of information:
* Years ago a hosting provider I worked for acquired the IBM Boca location, my personal office was in the same building as where the IBM PC was developed.
* I interviewed with Microsoft in 2003 to help develop MSN, they didn’t like my predictions (that came out true).
Cuil down to traffic levels before hype
August 27, 2008
Evidently Alexa and Statcounter are both reporting that Cuil’s traffic levels are down to where they were prior to the media hype… meaning that they are not even on the radar anymore.
We issued a challenge to Statcounter and they responded with the decline in Cuil’s traffic.
This is roughly akin to same problems that both the massive declines at MSN and some serious problems with Yahoo’s Traffic
It’s going to be Google as king for some time…
Digitas : Yahoo bends over for us
August 25, 2008
Steven, Yahoo is bending over for you because they have no choice… not many people use Yahoo search as compared to Google… you are looking at a MUCH smaller market…
Some search engines have taken measures to help build relationships with brand advertisers, said Steven Kaufman, media director at Digitas. On Yahoo, for instance, Kellogg’s Special K has displayed its logo and linked to a video for its “Eat Breakfast, Weigh Less” campaign. The paid listing also provides a link to a Special K Challenge Group on Yahoo Groups.
“This is branded search,” Kaufman said, referring to Yahoo. “It’s not going to be the be-all or end-all of branded search…but go to Google, and it’s not as compelling…. stated on ClickZ”
Steven, the reason Yahoo is experimenting with these ads is not because Yahoo loves you…. but rather because they are forced to make these changes since their market share is tumbling like ton of bricks… and I predict this will go exactly the same way as how MSN experimented with ads… and boy did that experiment head down the toilet…
The problem doesn’t stem from how you display your ads… it matters not what the ads look like at all if no one uses the search engine to see the ads.
In short, they need to fix their search engine first before they can discuss experimental marketing with anyone…. mostly because you need someone on the site to test the marketing….
B|Net / C|Net says Microsoft = Fail with cashback search
August 21, 2008
Our friend at B|Net noted that we were right (next time link to us there buddy)…
Nielsen Online released their search engine numbers for July today, and I think its safe to say that Microsoft Live’s Cashback initiative, which saw the company offering money back to consumers and Cost Per Action pricing for advertisers, isn’t gaining much traction. Full Story
And where the discussion took place: With the headline:
“97% of our Microsoft Employee visitors come in from Google search” Full Story
Pretty much sums up our opinion on the MSN / Microsoft Initiative.
Jake it’s not working — trust us on this
July 21, 2008
One of our favorite reads is B|NET (C|Net spinoff) that focuses on various industries, the area of course we like spending time on is the Advertising Agency section of course. Jake published this article “Microsoft’s Cashback Ad Plan Is (Maybe) Working” Trust us Jake.. it’s not (and for Jake’s defense.. he noted the figures are highly confusing)…
If anything the boost looks like 100% growth.. but it’s an additional 10 people that logged in for a futile attempt to boost their sales to their online store.
Remember, MSN is trying to be a search engine. Instead what they did was offer a better deal for advertisers on their non-trafficked site. That didn’t improve search however… it offered a better deal for advertisers to push out ‘free ads’ on a search engine that no one uses because the results are filled with spam and non-expected results show up.
You can’t make money from no traffic … and very few people uses MSN as their default search when compared to Google.
For a real world example, we are ranked equally in virtually the same spot in MSN and Google for a host of terms. Yet the vast majority of traffic comes from Google… every so often we get a visitor from MSN… but by no means is it noteworthy… we get more traffic from a blogroll link on B|Net than MSN…
We should know their mentality at Microsoft, I personally interviewed there to help ‘fix the problem’…
MSN facing extreme levels of departures
July 9, 2008
PBL MEDIA and Microsoft have tried to squash market concerns regarding the massive string of senior management departures at ninemsn. Evidently they are getting Google rolled overseas, MSN’s market share is down to the point where clients don’t even want it on their ranking reports… in the words of a client ‘it just takes up disk space’ .
The fact that 97% of Tribble Agency visitors that work at Microsoft come in from a Google Search tells the whole story… Here is the report regarding the disaster unfolding at Microsoft.
Microsoft drops Pay Per Click - goes right to pay per performance
May 22, 2008
This will stop click fraud dead cold. The model will keep advertisers happy.. million visitors and not a penny allocated unless someone buys something… this is pretty interesting.. The chances are slim to none that Google will follow suit… mostly because Google doesn’t need to.
Microsoft won’t make a penny from this..
Microsoft (NSDQ: MSFT) unveiled plans Wednesday to entice advertisers and users of its search engine with cash-back savings on online purchases, launching a site called Live Search cashback.
The new site is ostensibly a product search site, but any of the products found by using Live Search cashback can be bought for a certain percentage off even the cheapest price that comes up from a variety of stores participating in the promotion. Advertisers, meanwhile, will only pay per purchase,
not per click.
MSN / Windows Live at 3.09% Market Share
April 12, 2008
A recent sample of 1,016 websites, over a 1 month time with a total of just under 1.8 million unique visitors has shown the following results:
79.01% Google
16.05% Yahoo!
3.09% Microsoft (Live,MSN)
1.85% Other
This report was done by roughly a dozen teams the majority of them members of Tribble Advertising Agency (either direct authors or subscribers).
The requirements were to send over part of each of their server logs… and all the uniques were counted and the referral search engine was counted… the above was the end result.
We are inviting others to take part. Please comment if you are seeing similar results or if you are not…
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