Saturday, December 10, 2005


Peter Hershberg

I don't think that paying users to click on ads is a sound strategy. As Umair pointed out, click fraud will turn into the huge issue many people *think* it is today. AllAdvantage, who paid people to view ads, comes to mind here. Perhaps MSN should think about sharing revenue with users once they've converted instead?

More reasonably, I think MSN should take the two following approaches:

1) Cut into competitor distribution by offering syndication partners guaranteed revenue that exceeds the (sometimes generous) rev shares they're currently receiving from Google/Yahoo. This is the approach GoTo used early on and we've all seen how that story played out.

2) Reward advertisers and agencies. If MSN is so anxious to give a share of the billions of dollars in their war chest back to those who help make them money, why not simply offer discounts to SEM's and agencies? The features included in MSN's new adCenter (demographic/behavioral targeting) are clear evidence that they intend to compete for market share not by targeting the SME market that initially drove the growth of Google and Overture, but by targeting the market's most sophisticated advertisers (i.e. largest spenders) instead. If MSN gave some percentage of total monthly spend back to SEM's, they'd see many more dollars start to flow their way. This would essentially be the paid search market's version of a "volume discount" -- something that no other engine offers (or can afford to offer) today.

More thoughts here:


vinnie mirchandaniv

I almost sense glee in the market Google is about to be tweaked. CIOs are far more worried about IBM's 100 b, Mircosoft's 40b, Oracle's 15b - v/s 6b for Google. Because they realize Microsoft has 87% gross margin, Oracle 75%...almost pure profit...CIOs would love a results based model like Google's instead of the lock-in pricing they have from so many vendors...

Michael Bayler

I see this talk from BG as pretty naive. Since when has MS demonstrated leadership in brand comms or customer experience - even in 1.0? The demands of the 2.0 user render any form of interruptive advertising a brutal deal-breaker. Far more sophisticated, indirect, enabling models of branded experience enhancement need exploration before MS can go anywhere near this strategy. Respect the firm, but this is way off their zone.

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