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Even before it made a widely anticipated announcement on July 29 that it would partner with Yahoo to do battle with Google in the market for search-related advertising dollars, Microsoft commenced a $100 million campaign to attract users to its new search engine — Bing.
Early reports show that since its June 3 launch, Bing has managed to draw more users than its predecessor, Live Search. According to Wharton faculty, however, while Microsoft’s campaign — which is both a re-engineering and a rebranding of Live Search — has been successful so far, it is unclear whether even such a well-funded effort can make significant inroads in a market dominated by Google. On the other hand, they believe the campaign helped pressure Yahoo into what may ultimately be an important partnership for Microsoft after months of fitful negotiations.
Aside from the big spending on advertising, Microsoft imbued Bing with features that were not available in Live Search, including better parsing of images and a focus on four key consumer-oriented areas: product comparisons, travel planning, health research and finding local businesses. Microsoft’s aim: Position Bing as a “decision engine” that can cut through the clutter on the Internet.
Prior to the launch, Microsoft was able to generate buzz among Bing’s early reviewers and adopters, a critical component of marketing in the age of social networks and blogging. Live Search lacked that virtual word-of-mouth support. Live Search also lacked another marketing component that Bing shares with Google: a name that can be easily used as a verb.
A lot can rest on a name change — and Microsoft desperately needed to update its search engine moniker, says Jehoshua Eliashberg, a Wharton marketing professor. “Microsoft had a bad experience with MSN Search and Live Search, and it makes sense that the company had to rebrand,” Eliashberg notes. “Bing is a much more effective name.” Jerry (Yoram) Wind, another Wharton marketing professor, adds that Microsoft really had little risk in renaming its search engine. “Live Search didn’t have traction before, so there’s no group of consumers who will be upset [that it has been replaced].”
“Rebranding a product is necessary when it no longer has the brand positioning or value perception in the consumer’s mind that a company wants,” says Wharton marketing professor Eric Bradlow. “This rebranding can be done via advertising, changing the features of a product or — ideally — doing both. Name selection is also important. Bing has an exciting sound to it and is memorable.”
Thus far, Microsoft has been modestly successful at attracting traffic to Bing. According to comScore, which measures web use, Bing drew 8.4% of all Internet searches in June, a gain of 0.4% over Live Search’s performance in May. Google had 65% of the June search traffic, while Yahoo drew 19.6%.
Microsoft’s next challenge is considerably more difficult. Wind says that Microsoft has to keep promoting Bing to illustrate commitment to the name and to retain customers. Generating enough excitement to get consumers to try Bing is one thing — retaining them is quite another, according to Wind.
Is Bing good enough to keep people coming back and make it an alternative to Google, which has millions of satisfied customers? Wharton marketing professor Peter Fader, who co-directs the Wharton Interactive Media Initiative with Bradlow, says the hand-off from attracting to retaining customers is often difficult. “Marketing officers don’t do a good enough job of generating trial versus repeat customers. It’s easy to get people to try something — you just shout at them enough — but the traditional aspects of marketing are useless in getting repeat customers. The product has to deliver the goods or people will just go back to Google.”
Microsoft executives are upbeat about customer retention, and hope even to turn Bing into a verb, like “xerox” or “google.” Kevin Turner, Microsoft’s chief operating officer, said at a recent conference that the Bing moniker was “pretty unforgettable” and it’s up to Microsoft “to turn this into a verb.” Reaching that goal is easier said than done. For example, Wind notes that he has “googled on Bing.” “We’ve still got a long way to go,” said Turner, “but we have momentum.”
Fader says that Microsoft’s marketing of Bing is primarily focused on brand awareness and getting consumers to try the search engine, but the software giant’s ads are clearly aimed at taking on Google directly — even though Microsoft’s search engine has little chance of toppling the market leader. So why target Google? Because Yahoo was — at least initially — the real target, says Fader. “Bing has absolutely no chance of beating Google, but if it can crowd out the other players, it can be a solid No. 2,” he notes.
“There is historical precedence for this type of campaign,” Fader points out. “The Bing campaign is exactly the same as the Visa campaign [in which] it said consumers needed a Visa [card] because American Express wasn’t accepted everywhere. After a while, everyone knew you should carry a Visa and an American Express card. Visa wasn’t targeting American Express, though. It was trying to crowd out MasterCard. It’s the same thing here. Yahoo was Microsoft’s MasterCard.”
The early June search traffic showed that Microsoft’s crowding out strategy worked. Youssef Squali, an analyst at brokerage Jeffries & Company, said the comScore numbers indicate that Bing’s gain came at Yahoo’s expense. “Bing’s share gains seem to come directly at the expense of Yahoo while Google remained unchallenged,” Squali wrote in a research note.
Wharton management professor Lawrence G. Hrebiniak adds that those early gains by Bing probably provided leverage for Microsoft’s successful effort to partner with Yahoo. “Microsoft was playing Bing two ways. The first was to position Microsoft as a bigger search player. The second was to secure a search and advertising pact with Yahoo.” Offering a credible search engine of its own made it “easier for Microsoft to go to Yahoo and say, ‘If we combine, we can have 30% of the search market.'”
More than Search
However, Bing and the partnership with Yahoo are about much more than chasing Google in a search engine competition. Wharton experts say the search effort represents a defensive strategy that can protect Microsoft’s multi-billion dollar businesses, such as Windows and Office, while enabling new business models.
“I view the Bing marketing as a component to an overall defensive strategy at Microsoft with respect to Google,” says Eliashberg. “Increasingly, the two will compete head to head” in areas beyond search.
Google has a web-based suite of applications that aims to compete with Microsoft Office in consumer and small business markets. And Google’s enterprise application division is designed to take away Microsoft’s corporate customers. The Mountain View, Calif., company also has recently announced plans to create an operating system for netbooks, small computing devices intended to be tethered to the Internet. Microsoft’s Windows XP is currently the dominant operating system on netbooks, the fastest-growing slice of the PC industry.
Efforts by Redmond, Wash.-based Microsoft to keep market share from Google will revolve around free, web-based versions of its most popular products. For instance, Microsoft is planning a web-based version of Office that will be free to consumers who are willing to accept the advertising that comes with the product.
“Bing is [a] pawn in this broader game that Google and Microsoft have going,” says Fader. “It’s a big chess game [with] Microsoft and Google competing on many fronts. Ultimately, Microsoft and Google will end up respecting each other’s turf by threatening nuclear war. Neither really wants to be in the other one’s space, and they will be perfectly happy when they carve up the market.”
Bing’s initial gains may not indicate future success, and marketing can only go so far. Wharton faculty say it will take six months to a year to accurately gauge Bing’s momentum. “If I’m a Google user, it’s still unclear why I would switch to Bing,” says Wind. “In order to switch, you have to have a good reason, and in general, people are happy with Google. Microsoft had to create a fair amount of buzz and excitement to lead people to try it, and the company did that. But how do you retain them?”
Microsoft doesn’t have to go back too far to see the historical disconnect between attracting and retaining customers. In June 2007, IAC/InterActiveCorp invested nearly $100 million in advertising for its redesigned Ask.com search engine, and by October of that year it drew 4.7% of Internet search traffic. But by June of this year, its portion of the traffic had declined to 3.9%.
While Microsoft is unlikely to topple market leader Google, Bradlow says that the company’s new search engine has a chance to gain traffic with its focus on key verticals like health and travel. “Focusing on a marketing niche definitely makes sense. Typically, when there is an 800-pound gorilla, the adoption of a follower happens first on a niche basis, and word-of-mouth becomes a great source of recommendations.” In that respect, Microsoft’s strategy to “conquer things one vertical at a time” gives Bing a chance, he suggests.
But marketing alone will not make Bing a success. Microsoft has to convince habitual users of Google to switch to Bing. “It’s very hard to get people to change habits, especially when you’re competing against a brand [like Google] that has become a verb,” says Eliashberg.