Microsoft adCenter is gearing up

Microsoft adCenter has been live in the UK for a few weeks. Today the beta for Microsoft ContentAds has opened to selected Microsoft advertisers. I first saw the story on Jennifer Slegg's blog JenSense. TechCrunch writer Marshall Kirkpatrick followed up with a story as well.

This is big financial news because the truth is the search business is all about delivering contextual ads with high CTR (click through rates) along side relevant search results. The media focus has been on the search index, relevance, size, and speed which are the table stakes for this game. The real money is made by delivering ads.

Yahoo had been delivering ads for Microsoft sites, but last year Microsoft launched a service to deliver its own ads for its own sites. Microsoft adCenter extends the service to all advertisers for MSN Search and other Microsoft sites, and eventually to all web sites.  Microsoft adCenter will be a full service competitor to Google's adSense and Yahoo's Publishing Network.

JenSense points out "ContentAds will also be utilizing demographic targeting, geo-targeting and incremental bidding tools for all advertisements as well, so advertisers will have full flexibility on their ads appearing through ContentAds."

TechCrunch says "More big time competition for Google’s AdSense, Yahoo! Publisher Network and the other players in the field should mean higher revenue cuts for publishers and more innovation in the way ads are served."

This is probably boring to most people but this is where the battle for advertising dollars is won and lost. Targeting ads by demographics, geography, time of day, variable and incremental pricing, are very important to advertisers.

I believe adCenter will have very advanced click fraud detection that will filter out invalid clicks far better than Google or Yahoo. This will make a big difference to advertisers.

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Comments

[Derick Harris]

Mr. Dodge states in reference to Microsoft and advertising:

"[Microsoft adCenter]... is big financial news because the truth is the search business is all about delivering contextual ads with high CTR (click through rates) along side relevant search results. The media focus has been on the search index, relevance, size, and speed which are the table stakes for this game. The real money is made by delivering ads."

It might be the case that, at present at least, so-called contextual ads and click throughs drive search engine advertising.

Consider, however, Mr. Dodge's previous unrelated observation that, in effect, real innovation rarely comes from the center: it nearly always comes from the margins, which is to say, "outsiders".

This was as true (in their time) of Microsoft, Apple, even Intel, as it is today. So:- what makes Mr. Dodge imagine that Microsoft AdCenter and its "big financial news" will be innovative?

Because it (Microsoft) will compete with Yahoo, Google and the others? That's innovation? Is that even news?

Hardly! Innovation happens, as Mr. Dodge knows very well, when a radical, which is to say disruptive, technological or even intellectual paradigm (innovation) challenges the existing monopoly apparatus that has capured whatever industry happens to control any technology or even a way of thinking that one wants to name.

If you doubt this, consider something called "The Structure of Scientific Revolutions", which is to say "normative" science. Normative science is what the monopolizers would have us believe is the "science" behind search, which is monopoly capitalism; and, if one happens to believe that natural or technological monopolies are good for innovation, then fine!.

It might be true that the prevailing ideology, which is to say the ideology of money and profits is, as Mr.Dodge states, [t]hat the real money is made from delivering ads. But, let;'s not go overboard. This isn't innovation and it most certainly isn't the next "big thing".

One can see, for example, that no mathematical algorithms on earth (the latter which are more or less similar to my Aunt Martha's knitting patterns) are likely to perceive what individual persons actually want to achieve when they look for something, unless they name it precisely, where "precisely" means that the person doing the looking "knows what they don't know", as distinct from what they do know.

That's common sense! Therefore, eliminate all possible variables that contradict what a person actually is looking for and you have an algorithm that arguably is effective.

Search alogrithms can't do that. Never did and possibly never will. And what Google, Yahoo and the others are doing is -- for that reason and if we use the criterion of disruption as the standard for real innovation -- most certainly not innovation. It might be Incrementalism. But, its not the next "big thing".

I therefore predict that the next "big thing" in advertising at any rate, will happen when all advertising...that's right...all advertising on the public Internet is (a) free to all comers; and (b) that the organizing principle for displaying the advertising has been reconsidered to exclude mindless althorithms that do nothing from an editorial standpoint except to presumptively second guess what a reader acutally wants to achieve, instead of what advertisers believe it is in the best interests of the advertisers themselves, to have the reader achieve.

To do that is to empower the "algorithms" that human beings normally use inside their heads...meaning their patterns or "ways of thinking" to decide what they don't want, with reasonable precision, and then by default provide such persons with an eliminating apparatus, probably called product or service "master channels", or specialized advertising "pods", that themselves use certain alorithms to apply in very precise ways the required mathematical assumptions to deliver true contextual ads.

That's the next "big thing", at least in advertising. And, the kicker from all this is that the required network of specialized advertising "pods" has been layered across the public Internet, beginning in 1998, where they have remained silent and unused, and available to anyone who wishes to use them, to this very day.

Hundreds of existing natural language product and service master channels in the dot-com name space, where the name of each and every channel precisely corresponds with the generic (or natural language representations) of everyday goods and services; and, where each and every master channel, or "pod", was and is intended to work at level three so as to accommodate what amounts to almost each and every brand name product or service advertiser, where the name of the advertiser is then attached to the "pod" as, for example, in the form of addresses like: mybrand.masterchannel.com.

As to the subject of contextual advertising, meaning monopoly capitalism that merely imitates the old media monopolies of the past - one does not hear about the existing master channels that began layering themselves across the Web (c. 1998-99)in an era when information monopolies were thought to have been rendered next to extinct by the advent of global connectivity.

From this, one can readily see that the present ideology, far from being the next "big thing" is merely the next big strategy aimed at maintaining and perpetuating the monopolistic proclivities of the Microsofts, the Googles and the Yahoos of this world.

Derick Harris
Cyber ID
Volcano, Hawaii

[Andy Miller]

Well said Derick. My partners and I have been working on non-mathematical search algorithms for the last ten years to solve the issues you've highlighted.

While Don is correct in stating that Microsoft, Google and others view search simply as a means to generate ad revenue. This is evident in the lack of innovation in developing unique algorithms to generate better organic results. Rather, algorithms are being tweaked to better identify searcher demographics and serve ads. While this may increase ad revenue in the short-term, it certainly does nothing to gain market- or mind-share.

I don't know of any user that would switch search engines because they were being served better ads. I do, however, know many users that would switch search engines in a second if they could find what they are interested in without having to constantly translate their thoughts into keywords and deal with all of the SEO/SEM noise that comes along with today's SERPs.

In my opinion, the "next big thing" in search will center around conversational computing and the semantic processing of meaning.

[Don Dodge]

Derick, thanks for your comments. I will try to respond to as much as I can.

First, I didn't say that Microsoft adCenter was innovative. In fact it is not. I have said many times that most innovations comes from small startups...and most of the money is made by fast followers. Not that it is right...I don't like it...but that is the way it normally plays out.

But, adCenter is big financial news because adCenter will be a full service competitor to Google adSense. The search market has been competitive for a long time, but the ad serving market has been pretty much dominated by Google and to a much lesser extent by Yahoo. Microsoft adCenter will change the competitive dynamics and offer more choice to advertisers and site publishers.

I would strongly disagree with you about the efectiveness of search algorithms. They are amazingly effective. Most search queries are one or two words, yet the search engines come back with highly relevant results. Try this test. Walk into a public library, find the research librarian and say two words. See what they come back with. My guess is a blank stare, or more likely 2 or 3 minutes of followup questions to figure out what you really want. Search engines work with just a couple words, find the most relevant results, rank them, find relevant ads to go with them, and deliver it all in less than half a second. This is rocket science and there are very few people in the world who can do it.

I read the last part about master channels and pods several times and I can't quite grasp the point you are trying to make.

[Don Dodge]

Andy, I am familiar with Q-Phrase and some of the other search companies that provide contextual search, categorization by related topics, finding several meanings of a term, etc.

There are lots of different approaches to search and retrieval that work well for different types of users. Enterprise search of corporate databases is, as you know, a very different problem from web search for consumers.

Consumers are impatient and don't give you a lot of precise search terms to work with. I remember several experiments at AltaVista with Natural Language Processing and various search refinement approaches. After all the tests and analysis it came down to this, the more words in a query the more accurate the results will be. Second, if you could get the user to iterate and refine their query by suggesting relevant word pairs we could produce very relevent results. Most consumers are not willing to do this, whereas enterprise users might be willing to take the extra time to get better results.

The big web search engines all have "advanced search" options that let users enter very precise queries and get back amazingly accurate results. Less than 1% of the population use these features.

The web search engines focus on the average consumer search and I thik they do a great job at balancing speed, relevance, and and thoroughness to deliver excellent search results.

The advertising relevance side of this is of no interest to consumers, but it is the rocket science that makes the money for advertisers and site publishers.

[John Powers]

Don --
It's interesting that you think "this is big news financially." It could be, someday, but Microsoft is a mighty big company -- it takes a lot to move the dial. In its current state, AdCenter needs a lot of work just to be competitive with existing offerings. I just posted about it (powersunfiltered.com), based on our experience at Digipede with AdCenter's Search Ad offering.

As a Microsoft partner and as an AdCenter customer, we wish the MSN Search and AdCenter team all the best in improving the service, but our experience puts this in the "wait and see" category of Microsoft products and services. Maybe the Content Ads will make the offering more useful, but currently, online ads (search and content) are a Google world, with good reason.

[Don Dodge]

John, Fair comments based on real experience with the early beta. I accept that and respect your judgement. You are right, Microsoft adCenter has a long way to go, but it may not take as long as you think to get there.

From a technology perspective I am pretty confident that the adCenter team can deliver a world class solution for advertisers and site publishers. The system will be very competitive financially and deliver an excellent ROI.

In terms of market share…that could take longer. I agree that Google dominates search engine market share, and also dominates the ad serving business. There really hasn’t been much competition. Advertisers and web site publishers want competitive alternatives. So do search engine users.

Microsoft has come from behind before. Remember Netscape? They were free and had nearly all the market. Remember Nintendo and Playstation? xBox started from nothing and now has huge market share. It always looks impossible, but great products and staying the course eventually yeilds results.

The search engine advertising business is about $10B and growing rapidly. adCenter can reasonably get $1Billion of that market near term and a lot more long term. That moves the needle…even for Microsoft.