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March 7, 2007
Gradualism, Subsidies, and Microsoft's Ad Money Move Online
Lots of media only now picking up the story I highlighted here last weekend on how Microsoft is moving much its advertising allocation online from offline. Two things jump out at me:- People continue to wrong think incrementalism in ad shift, acting as if money will move slowly and steadily from one medium to another. Given rapidly changing audience appetites, it is much more likely that we will see jump shifts in spending.
- I found it curious that the same weekend Microsoft was being pilloried for its disappearance in search-related marketing that it announced a major shift in its online ad money allocation. Anyone other than me worried that Microsoft will funnel a bucket of money to its own online ad service, neatly lifting itself up by the e-bootstraps?
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Agreed. The second point is not well thought out.
Posted in a hurry. I was more mulling whether Microsoft would divert dollars to MS AdCenter despite poorer click-thru performance.
The inventory MSFT sits on is some good sh*t. They don't have a ton of it and it isn't monetized that well but conversion rates from a CPC to a CPA are better than Yahoo or Google. I would expect them to shunt all the traffic they could through there as it's high quality stuff and then work the rest if they have any through the other avenues. It's what a lot of smart advertisers do.
I'm always curious about assymetrical reactions to symmetrical issues. If Google shunted all their ad spend through themselves no one would raise an eyebrow.
Really? If Google's ad platform was underperforming and losing share you wouldn't mind, as a shareholder, if Google ran all its ads through its own system?
I do not follow your second point. The issue for MS adCenter is demand, not supply. Its internal campaigns will suffer the same constraint any other adCenter advertiser has today - less clicks than it gets on Y or G.
If your point is internal spend will raise overall CPCs due to the increased competition, then the increased internal spend would only accelerate something that would have happended anyway. If MS can make incremental money by routing lower cost CPC traffic to higher revenue impression revenue, then it is just exploiting a market inefficiency.