Microsoft may unlock new branding market with Yahoo Acqusition

Posted by Rowland on February 3 at 5:01 PM Google dominates 75% of search. Search has shown the strongest gains in advertising online. Print and broadcast are at a stand-still, or falling. This refrain is so common place right now it has become a trope in the industry.

Search is about direct marketing. It gets you somewhere, and it opens up marketing opportunities during an audience’s “seeking”, or “finding”, stage that was difficult to pinpoint previous to Google making it a market (indeed, they made this market in the last recession).

“If you had asked my customers what they wanted they would have said a faster horse,” Henry Ford famously articulated. Search can reach those typing in “horse” and teach them about a new, faster, breed; but, search cannot introduce an unknown need such as “car” to horse owners. While there are some branding opportunities with search, fundamentally it is the most powerful direct marketing tool ever created.

Google’s stock dropped 8% on the announcement of the hostile bid, for some this is because they see Microsoft and Yahoo forming a hefty 30% share of search, some argue that it will also let Microsoft and Yahoo compete on the ASP application basis, or becuase of the combined email resources (which represent the new, most powerful, social graph) but I believe it is because Google’s market for search is perceived to be slowing down, and perhaps more focus on display advertising could be the next competitive online market for advertising, expeically through improved ad managment.

Display advertising, such as banners or skyscrapers, have suffered from poor response rates next to search. Although groups like  aQuantive—whose three operating units consist of Avenue A | Razorfish, Atlas and Digital Performance Media (DPM) – have, combined, produced some of the best results in changing response rates in creatively driven, brand oriented campaigns.  Additionally, more branding dollars are going online due to the fall of other options such as print and TV.

Microsoft purchase aQuantive last year giving them creative, media buying, tracking and analysis capabilities. It was surprising acquisition because of the creative side of that business, giving some chills to Omnicom, WPP and Interpublic. Yahoo leads in Display advertising. The projections for search reaching $20 billion by 2015 are only a fraction of the dollars spent on branding in advertising (despite those that argue this is just another old media acqusition). As advertisers become more sophisticated with metrics, and look to the web for more compelling ways to engage customers online, display advertising could have the largest bump over the next five years.

Microsoft’s goal of purchasing Yahoo could be incredibly wise—beyond the economies of scale they hope to achieve right off the bat—to place them as the center of the rise of brand advertising online. A powerful force to introduce new innovations, new needs, to a even larger and more global audience base than can be reached through TV or print combined.
Topics: advertising, branding, financial services, interactive        SHARE: