The Battle for Search Supremacy – Google vs Microsoft – Round 2

A few months back I wrote an article about how Microsoft and Google were about to go head to head in search and detailed Microsoft’s plans to take on Google’s online marketing monopoly using display advertising. A few things have changed since then and it’s time to re-visit the battle.

Since that article, the much-hyped Microsoft-Yahoo! deal has fallen through (most probably for good now) and Yahoo! have signed an $800 million non-exclusive search advertising deal with Google that will see Google ads appearing in Yahoo!’s search results.

This deal basically means that Microsoft is really the only player left who can seriously have a tilt at Google. All the other players are either too small to be a genuine threat or have some vested interest in Google.

Yahoo! is now one of the latter. The problem that Yahoo! has is that by signing this deal, they have effectively conceded the search advertising war to Google, who maintain a massive market share of around 80%.

However, it’s important to note that this is not the first time that Yahoo! have outsourced to Google. Google supplied Yahoo!’s search results from 2000 to 2004 before Yahoo! engineered their own search engine. Microsoft’s MSN search was likewise outsourced for a number of years to LookSmart, Inktomi and AltaVista before they too decided to create their own engine in late 2004.

So while most consumers believe that Yahoo and MSN have been in the search game for years, and are regarded as the two ‘other players’ in the ‘Big 3,’ both have really only been producing their own search results for about four years. And now that Yahoo have gone back to Google for search engine advertising, it raises questions about whether or not even Yahoo! think they can match it with Google’s AdWords program.

Which brings us back to Microsoft as the only player who has not got some interest in Google’s success. There are a couple of signs that suggest Microsoft may be planning an assault on the Google fortress. The first is the breakaway of the MSN search engine to the Live search engine which operates on a cleaner search-oriented feel (much like Google’s) as opposed to the web portal style of MSN and Yahoo!. This move has allowed Microsoft to frame its Live search as a separate entity that is focused on search, something that Google used very early on to gain credibility.

The announcement of Microsoft’s plans to take on the realm of display advertising is another indication that Microsoft is mobilising its forces. Microsoft AdCenter, while currently no match for the AdWords juggernaut, is in a prime position to receive a makeover and move rapidly into the display advertising field.

However, if Microsoft plan to seriously take on Google they need to move quickly as Google’s acquisitions of DoubleClick, and to a lesser extent YouTube, suggest that Google is keen to move in on this new market as well.

So, whilst there is no doubt that Google is by far and away the leader in terms of market share for both search queries and advertising dollars, there are signs emerging that suggest the Microsoft giant is not ready to lose the search war just yet, although they have to be ready for a long battle if they want to pinch the crown.

Round Two – Google Knockout… but is there movement on the canvas?

Craig Somerville is a Director at Reload Media, having worked extensively on the digital and online strategies of leading companies within Australia and around the world. With a background in marketing and economics, Craig's unique experience offers great insight into how the world of search and online marketing is changing in today's rapid marketplace. He is also a Google AdWords Qualified Professional and regularly consults on all aspects of digital marketing including search engine optimisation (SEO), search engine marketing (SEM) and social media.