Rich Media Ads Merging with Social Network Advertising

Advertising on New Media

Subscribe to Advertising on New Media: eMailAlertsEmail Alerts newslettersWeekly Newsletters
Get Advertising on New Media: homepageHomepage mobileMobile rssRSS facebookFacebook twitterTwitter linkedinLinkedIn

Advertising Authors: Melih Oztalay, Shelly Palmer, Matthew Lobas


Microsoft-Yahoo! - Three Reactions

"Microsoft [was] the company around which everyone planned his strategy for two decades. Now it's Google."

My first reaction to the news that Microsoft wants to absorb Yahoo! was “of course.” After all, Microsoft has not managed to stop Google from becoming the only technology player that matters. Microsoft has not stopped Google from becoming the only player whose strategy is the center of the universe. Microsoft held the coveted position as the company around which everyone planned his strategy for two decades. Now it’s Google.

Venture capitalists, investors, content providers, advertisers, businesses, and technology firms plot their courses around Google’s trajectory. This must really annoy Microsoft! More pragmatically, Microsoft needs a competitive search marketing/advertising offering. There’s a lot of money at stake. There’s brand at stake. There’s mindshare at stake. Search has become the starting point for all network interactions. Microsoft can’t afford to cede that first point of user-contact to Google. It’s worse than losing the browser wars. People search from their mobile phones, from their PDAs, from their cars, from their phones, from their TVs.

My second reaction to the Microsoft/Yahoo! take-over bid was, “oh no!” This is not good for customers. Having fewer choices never is. Having Microsoft—an already untrusted behemoth as our alternative to Google—(can we trust Google not to spy on our every move?) gives us two “big brothers” from which to choose and fewer alternatives. I immediately began thinking about white knights. Barry Diller, Rupert Murdock, John Malone all came to mind—so did eBay, Amazon, and Apple. I was intrigued that Google stepped up to the plate and offered a helping hand to stave off Microsoft. “Come partner with us, the way that AOL has done, and we’ll help you keep the green giant at bay.”

My third reaction was that, if Microsoft and Yahoo DO merge, they’ll need a new brand. They need a trusted brand identity. This need to re-brand for the mass market could precipitate the splitting up of Microsoft into two separate businesses: Microsoft, the consumer business (Yahoo/MSN and Xbox and Microsoft Live consumer software as a service), and Microsoft, the enterprise business (office applications, server software, and distributed systems). The only consumer products that have really won the hearts and minds of customers are the Xbox gaming products. It’s the one area in which Microsoft’s brand is very strong among consumers. X-Yahoo! could become an interesting, trusted brand and help Microsoft expand beyond the restricted confines of the business software market. I remember sitting in Bill’s parents’ living room, while he and Steve B. talked about strategy to a handful of industry analysts over a decade ago. They depicted Microsoft’s world as two concentric circles. The first one—which they dominated—was the business software market. The second one—which they coveted—was the consumer software and services market. They made it clear back then that they would spend any amount of money to keep trying to break through the barrier that separated the business software market from the consumer software and services market. Eventually, they said, we’ll get it right. At the time, they had MSN and no gaming products. That was also before search became the killer app. Search turned out to be the tidal wave that breaks down the barriers between business software and services and consumer behavior and consumption. Microsoft is still in search of a consumer strategy that will expand its market potential. Buying Yahoo! is a no-brainer and a good use of Microsoft’s cash.

From Yahoo’s perspective, the board will probably hold out for a higher price and will probably get it. As of this writing, it doesn’t look as if any white knights are rushing to Yahoo’s side. Few firms have as much at stake as Microsoft in battling Google for the hearts and minds of the world’s consumers and advertisers.

More Stories By Patricia B. Seybold

Patricia B. Seybold is a consultant, customer advocate and thought leader with 30 years of experience working with customer-centric business visionaries and technology pioneers in many industries to help these leaders transform their businesses to better meet and anticipate their customers' needs. She is the CEO of the Patricia Seybold Group, a Boston-based consulting firm focused on customer-led innovation, customer experience transformation, customer-centric business and IT strategies and roadmaps, and in helping leaders shift their organizations' behavior to align around customers' outcomes and customers' key issues. Seybold is the author of three best-selling books, Outside Innovation (2006), (1998), and The Customer Revolution (2001).

Comments (2)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.