Saturday, May 19, 2007

Online Search Battle Continues

MSN vs GoogleNot being able to convince Yahoo about creating a partnership to compete against Google’s dominance in the online advertising field, Microsoft has announced the acquisition of giant digital advertising firm aQuantive for $6 billion.

Apparently, Microsoft has finally realized the growth potential of the online advertising business (expected to reach $40 billion and growing at an annual 20% rate), and is now making some serious move into the business. Microsoft’s last acquisition of aQuantive is actually the largest deal in its history. Sounds like a huge deal, doesn’t it? But the question would be: isn’t this too little, and most importantly, too late?

Let’s not forget that Microsoft launched AdCenter, its own advertising network, only one year ago; on the other hand, Google, the market leader, with its superior search technology, has relied on a business model based on online advertising since its creation over 8 years ago. In fact, Google’s spectacular revenue growth comes almost entirely from paid search advertising. Moreover, as referenced on my previous post Search Engine Market Share, Google accounted for 65% of all searches in April 2007, while Microsoft’s MSN was left with 9%. Clearly, this is an area where the aQuantive acquisition will not help Microsoft. And if Microsoft’s plan is to concentrate on selling ads on publisher’s websites, rather than paid keywords on search results, Google has that covered too with its recent acquisition of DoubleClick for $3.1 billion earlier this month.

Is there anything Microsoft and the rest of Google’s competitors can still do to stop the bleeding? One thing is for sure true, Microsoft won’t give up and this battle is getting very interesting. More to come, stay tuned!

*Update: Check out this article published in BestEzines.com

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