During February the ongoing Microsoft and Yahoo! ‘Search Alliance’ was given the official go-ahead by both the European Union and the US Department of Justice. Microsoft will now acquire the Internet search and search advertising businesses of Yahoo! under a 10-year exclusive license and, soon after this announcement, the company launched its new Internet smartphone product onto the market.

Firstly, the Search Alliance between Microsoft and Yahoo! has now got the green light to develop new and better search services to try to take on the market dominance of Google. Under the terms of the agreement, Microsoft will manage the technology platforms that deliver the algorithmic search results (powered by Bing) and also the paid search results, which will be powered by adCenter. Eventually all of Yahoo!’s PPC search services will be managed through the better adCenter system and probably not before time!

Yahoo! and Microsoft will each provide customer support to different advertiser segments, with Yahoo!’s sales team exclusively supporting high volume advertisers, SEO and SEM agencies, and resellers and their clients. Microsoft will support self-service advertisers. The full impact of these changes are likely to be seen by the last quarter of the year.

When Microsoft and Yahoo first agreed to combine their search services in July 2009, the market share of Google went down to 88.95% while that of “Microhoo” went up to 9.12%. This was very encouraging for the executives at Microsoft and Yahoo!, but the real question is whether this combined force can make a bigger impact into Google’s current level of usage and market share. There’s no definitive answer to that, but in order to compete with and surpass Google at its own game “Microhoo” has to innovate constantly and learn from the changing search dynamics.

Meanwhile, Microsoft continues to enhance its mobile technology and attempts to defy critics who say that its days are numbered in the rapidly growing smart phone market. On 15th February Microsoft launched its ambitious new mobile platform that is a major departure from its existing Windows Mobile offering. The new platform effectively scraps Windows Mobile 6.x with a completely revamped user interface and more tightly defined integration with devices and network.

Analysts say that the new Windows Phone 7 Series as a radical departure for Microsoft in terms of user-interface design, while also bringing something different to the mobile market. The company wants to compete against the iPhone, and similar products from Google Android and Samsung, but they are taking quite a radical move away from these products in the hope to gain significant share of this market.

The introduction of the new Windows Phone 7 Series won’t happen until the end of the year, and many have wondered whether Microsoft could become a factor in the mobile marketplace amid its declining market share. Observers said they were surprised and impressed by the progress Microsoft has made, but it remains to be seen to what level Microsoft will succeed. For this to happen they will have to prove that it’s stable, works very well and delivers on the partner integration Microsoft have promised.

If you would like more information about how the Microsoft and Yahoo! Search Alliance can help the marketing of your business please contact us.

Recent figures published by the Internet Advertising Bureau (IAB) in Australia show that the online advertising sector continued to buck the trend seen by the wider advertising market and recorded further healthy growth in 2009, with a 9% year-on-year increase to record a total spend of $1.87bn to the end of December.

The results from the quarterly Online Advertising Expenditure Report (OAER), compiled by PricewaterhouseCoopers (PwC), also showed that for the three months ended 31 December 2009, the total expenditure was $513m - the largest fourth-quarter recorded and an increase of $50.5m, or 10.9% from the fourth-quarter of 2008.

The IAB says that the continued growth of online advertising expenditure comes at a time when the total advertising industry is expecting a decline of up to $900m in the Australian marketplace for 2009 due to the impact of the global financial crisis. This shows that many companies are not cutting back so much on their online marketing spend as in other areas, or that new companies are starting to use online advertising in some form.

The general display advertising and search sectors both performed well for the full year, with search and directories advertising accounting for just short of $1bn or 50.5% of total expenditure, representing a growth of 17% year on year. This is mostly comprised of Google AdWords expenditure, which dominates this category and although Google doesn’t release their figures, the estimate is based on the same formula used by PwC in their regular surveys.

Spend on display advertising also grew in the year, up by 7.2% and it accounted for almost $500m or 26.6% of the total expenditure for the 12 months. However, classified advertising is the one sector that continued to lose share and saw a slight decline of 2.3% year on year, accounting for 22.9% of total expenditure for the year.

Within the general display figures, email based advertising comprised $9.3m of advertising expenditure for the last quarter, up from $7.9m in the previous quarter. Video based advertising increased its share of advertising expenditure from $4.7m to $5.3m for the same period.

Little change was reported in the pricing methods for online advertising expenditure, with the Direct Response pricing method comprising 26% in General Display advertising and CPM 74%. CPM pricing is based on a straight Cost per Thousand pricing methodology, sponsorship, or CPM-like Pricing, while direct response based pricing is based on a non-CPM display methodology. This may include any pay per click, pay per sale, pay per action or pay per lead.

If you’d like to know more about these figures, or how online advertising could improve your business, please contact us now.

What do we expect to see as the main trends for this year that will impact web search and online marketing activities? Here are our predictions for some of the key developments expected this year.

1) Pay-per-click advertising opportunities increase: PPC advertising - and Google AdWords in particular - is now a much more prominent part of the search experience and a powerful marketing tool used successfully by many companies. Google is already experimenting with new advert display formats, such as local maps, images and video, partly to improve the user experience and also to gain more revenue. These formats will become more widespread this year as Google also develops the service to counter the launch of the combined and improved Microsoft/Yahoo PPC service, and overall, the opportunities for advertisers will be increased to help expand the impact and reach of this fast-growing form of advertising.

2) The Bing-Yahoo merger takes effect: as noted above, the acquisition last year by Microsoft of Yahoo’s search service will begin to take effect this year once the regulatory and structural issues get resolved. In theory, the combination of the next 2 most popular English-language search tools after Google should be significant and create more of a challenge to Google’s dominance, although the quality of the search results and the services being offered will need to be considerable to change inbuilt user habits and make a dent on Google’s market share. As part of the merger, it is hoped that a new and improved PPC service will be launched so that advertisers have a better alternative to Google AdWords with an improved user friendly interface and more reliable results than is currently offered by Yahoo.

3) Personalised search impacts search marketing: the low key introduction of Google’s personalised search results for all web users (rather than just those signed into their user accounts) has passed relatively unnoticed in the press but this could start to have a significant impact on the performance of their search results this year. From a search engine optimisation perspective, it will become harder to track the ranking visibility of a website, although the important measure of a successful SEO campaign will remain the increase in search engine referral traffic as a result of any marketing investment on the site.

4) Twitter’s make or break year: 12 months is a long time for the Internet and the growth of Twitter in the past year has clearly shown this. The micro-blogging service has attracted a huge amount of press coverage and online comment, but the next 12 months will really determine whether Twitter becomes a significant marketing tool or fades from view as the next fad comes along. Twitter needs to start making money from its growing user base, or it will be an acquisition target. Outside of a hard-core of users, it also needs to demonstrate to businesses that it can be an effective marketing tool that is worth the input time. It certainly can’t be ignored if it continues to grow, and it’s likely that the service will become more sophisticated this year to offer users a better return, which will also place the service on a more secure financial footing.

5) Local search options see new developments: we’ve predicted improvements for small companies through local search marketing in the past and the opportunities continue to improve, particularly for those impacted by the new generation of Internet mobile phones. It is likely that new PPC opportunities will be introduced for local businesses to help improve the focus of their online budgets, plus the increasing localisation of social networking services will also open up new opportunities for companies to reach their target markets.

In the past few days, Microsoft and Yahoo! have finally struck a deal to combine their search forces against Google. This much anticipated and expected move has been dragging on for over a year and the final agreement just involves the search side of Yahoo!, rather than a full takeover of the business, but it still results in a significant change in the search market.

The 10-year deal will mean that Microsoft’s new Bing search engine will now power the results on Yahoo!, although Yahoo! will retain control of how the search results are displayed. Microsoft will gain access to Yahoo!’s search technology and the PPC advertising platform will move to Microsoft’s AdCenter system, but Yahoo! will retain responsibility for selling the search advertising across both networks. Display advertising will remain under the control of each company.

Yahoo! will receive 88% of search ad revenues generated by Yahoo! sites and, together, the 2 companies hope that by combining their technologies they can make a greater dent into the search dominance of Google.

So what does all this mean? Probably very little in the short term as the deal needs to be approved by the authorities and also there will be a major logistical challenge to transfer Yahoo!’s PPC advertiser accounts across to the Microsoft service. However, in the long term this should benefit advertisers who have found the Yahoo! PPC service slow and hard to use, whilst Microsoft’s service has been praised, yet limited by market coverage.

In the long term the combination of these 2 search services will mean a further focusing of search through a few routes. The impact on the search market will be mostly felt in the US, where the combined strength of these companies will impact nearly 30% of the market, yet in many other countries, Google’s complete dominance of search activity will not be greatly affected.

The further reduction in search competition is a shame, but it should be a benefit for PPC advertisers to use the better AdCenter system for non-Google search services. It’s also a tragedy for Yahoo!, one of the pioneers of web search and directory services, that it now seems to have finally lost its once powerful position in this market and will need to rely on its other consumer portal services. Over the years Yahoo! acquired some of the original leading players in web search, such as Inktomi and AltaVista, but some of this technology - if it was developed over recent years - may now help to evolve the quality of the Bing search engine.

For Microsoft, this move is what it has been waiting for and gives it the best opportunity to take on Google for greater market share of search. Whether they can use the share that they will get from Yahoo! in the USA to their advantage and to innovate and grow their user base remains to be seen.

If you’d like to know more about the implications of this move for your search engine marketing strategy, please contact us now for a discussion.

At the start of June Microsoft launched its new search engine, named Bing. Supported by an extensive advertising campaign in the US, Microsoft are hoping this updated version of their search technology starts to win market share back from Google. Bing is being positioned as a ‘decision engine’, which Microsoft hopes will “empower people to gain insight and knowledge from the Web, moving more quickly to important decisions”. But how does it compare to Google?

Bing incorporates some useful new functions, such as the new Explorer Pane. This includes Quick Tabs that break searches down into Web Groups relevant to the user’s search query. Although the Explorer Pane can be useful, the Quick Tabs often steers users to Microsoft services such as Bing Shopping, so it’s worth being suspicious of any search engine that habitually gives its own links precedence over others.

Bing’s results are also separately categorised, but this leads to a lot of scrolling down the page and seems redundant when there’s already the Explorer Pane to focus search results by categories. Both Bing and Yahoo! now display instant results in alternative formats to that favoured by Google’s “ten blue links” approach. Its Quick Preview feature gives you a text-based synopsis of the pages displayed in the search results and Instant Answers gives responses to questions such as currency conversion, weather forecasts and more. However, an issue with the Quick Preview feature is that it can take too long for boxes to pop up with text.

The layout and look of Bing’s new image and video search is good and the search-refining tools are easy to access. Microsoft has also added advanced technology to search queries involving travel and buying, through the purchase of Farecast in 2008. It is a useful function that compares the best deals for airfares and hotel rooms, although its level of accuracy is, as yet, unknown.

Overall, Bing doesn’t offer a great leap forward in search technology and results but it does make some progress by focusing on improving the consumer areas of travel, shopping, products and health. The new search engine is a great start with some useful functions, but Microsoft still has work to do, as the results don’t seem to be as intuitive as with Google. For example, it doesn’t personalise your results according to your IP address, like Google does.

So, as usual with Microsoft releases, Bing has potential but isn’t fully completed yet and it will only manage to convert Google users once it performs its ongoing tweaks and improvements to demonstrate more relevant results, presented in a better way. The US version of Bing is currently slightly different to all the other regional versions, from the Home Page image through to some of the functionality, although this is expected to be rolled out to all versions at some point.

More details about Bing can be found here. If you’d like to know more about Bing and how your website can rank on this search engine, please contact us.

Last month also saw the much anticipated launch of Wolfram Alpha, the new “computational knowledge engine”. There were the inevitable comparisons to Google, but the creator of this new search tool - physicist and software entrepreneur Stephen Wolfram – has discouraged these types of comparison as the new website serves a different purpose. Regardless of this, it’s an impressive new resource.

Despite all the press hype, Wolfram Alpha⁸ isn’t a traditional search engine. You can’t use it to find any type of web content online, but instead it can be used whenever you might be looking for a direct answer to a question. Stephen Wolfram has said that the site’s brain is built on content sites like the CIA World Factbook, US Census reports, Wikipedia, and “about nine-tenths of what you’d see on the main shelves of a reference library.”

The Home Page of the site provides example searches that can be done on Wolfram Alpha, plus there is further page of examples⁹ to give users the idea of its strengths. The team behind this search service have done well to collate all the data that it draws upon, but it’s only a small fraction of what’s available on the whole of the web and it may prove to be initially confusing or disappointing to people who are now so used to Google to find information online.

Wolfram Alpha’s main target audience will be mathematicians, engineers, and scientists – as well as students or journalists - because it’s based on Wolfram Mathematica, a software package that can do complex calculations. And being a “computational knowledge engine”, rather than a pure search engine, there are 5 main things that it can do better than traditional search engines, namely performing complex queries; localisation; precision; calculation and comparisons.

This is its main advantage, in that is can make calculations on the fly and present results based on the requested search. It can solve difficult equations and makes decent graphs for lots of specialised enquiries. This can also be its ‘Achilles heel’ however, as it encourages specialised search queries and it takes a bit of practice learning how to phrase queries so the engine understands the input.

Although it’s still early days and will surely improve, it’s currently too picky about syntax and not intuitive to work with. For example, if you enter a query it doesn’t understand, it just returns the text “Wolfram Alpha doesn’t know what to do with your input.”

Therefore despite exhibiting some interesting new technology, Wolfram Alpha isn’t intended to revolutionise search engines. Instead, it aims to add a useful new layer to them, not by trying to beat Google at its own game, but by complementing the traditional search engines and providing an alternative, specialised service to try bridging the gap between search engines and reference libraries.

If you’d like to know more about this new search engine, please contact us for further information.

Many of the trends likely to have an impact in 2009 have already started, but what are our predictions for some of the key developments this coming year?

1) The economic slowdown focuses attention online: there is little doubt that the economic impact of the ‘credit crunch’ in 2008 will have a significant impact on business in 2009, particularly in the US and Europe. Progressive companies will still need to maintain and grow their business in the face of any downturn and therefore even if marketing spend is cut back, the focus on online marketing will be greater, due to the measurability and proven cost-effectiveness of this form of advertising for many businesses. Search advertising will still see an overall growth in spend and market share of online advertising and despite some companies withdrawing from this sector, many others will put more spend into this targeted advertising to support their business.

2) Analytics becomes more mainstream: partly because of the widespread uptake of Google’s free Analytics tool and partly because of the greater need for advertising spend to be effective in 2009, the use of website statistics or analytics is expected to become more common, even for small companies. However, the interpretation of the data and the way that understanding can be used will still be the most important aspect of this trend, but companies can now access much better data on their online activities which in turn can help to improve their website and marketing strategy to get the most from their online spend.

3) Yahoo won’t survive in its current form: it seems inevitable that Yahoo’s ongoing saga that was the source of much news coverage in 2008 will come to some sort of conclusion in 2009. Whether this is with Microsoft eventually coming back on the scene and buying Yahoo’s search business, or some other form of takeover by another leading online brand, it’s likely that Yahoo won’t be able to survive the next 12 months in their current form, despite – or maybe because of – the change in their CEO. It would be a shame for Yahoo to lose more search market share, as Google needs a stronger competitor, but with the economic problems in the US, it’s hard to see Yahoo surviving much longer as a key player and we can expect more developments here sooner rather than later.

4) Video becomes the new marketing tool: as mentioned above, with the growth and impact of ‘universal’ search, video is now playing a more visible role within search and in 2009 this is likely to see a bigger impact in the business sector. Companies need to think about ways they can effectively use video to drive traffic and new business to their website, as it is becoming a more widespread medium and one that can play a bigger role within search and advertising channels. The ‘optimisation’ of video will be as important as the production if the effort of creating videos is to reap the rewards expected, particularly against the massive growth of user generated video content on sites like YouTube, but the creative use and marketing of videos will become more mainstream this year.

5) Reputation management becomes a core service: we’ve covered this issue before, but with the increasing growth and focus on user-generated content sites - such as review sites, blogs and comments on social networks - the need for companies to monitor what is being said about their business and brands, and to respond effectively to that content, will become a bigger requirement in 2009 as more businesses realise the potential dangers as well as the advantages of this trend. Online reputation management will therefore become a service in much demand from PR companies and search engine marketing firms, as web content is monitored and responded to in a more effective manner.

These were our 5 predictions for 2008 that were made in January last year, together with a review of what actually happened:

1) ‘Universal search’ becomes a significant optimisation issue: the inclusion of all forms of search results – such as images, videos, news or maps – within the main search engine listings has become more prevalent over the year, particularly on Google. This has created many opportunities for companies to achieve visibility within the search results in new and more creative ways. Local business listings have been the most effective method for many companies who target a localised area, so much so that Google has had to control some of the more extreme methods by companies trying to get listings within these results. Video sites like YouTube continue to attract huge traffic volumes and videos do appear within Google’s search results, when applicable. Google has also introduced new formats for PPC adverts although these remain limited to the content network and have yet to be offered within the main search listings.

2) Personalisation gains ground: the impact of personalisation has yet to be understood as no figures have been released by Google, or other websites that offer this option, to show what the levels of uptake have been. However, at the end of 2008 Google introduced the Search Wikia option for logged in users, so that search results could be adapted to suit user preferences and notes could also be added to listings. There were also hints from Google that this data may also be eventually used to determine search engine rankings which is likely to attract abuse of the system. We believe that personalization is still in the early stages of development with the vast majority of web searchers being aware of, or using, this option, although it is likely to gradually increase usage within the market and to become a more significant issue for search engine optimisation.

3) Behavioural advertising becomes the next ‘big thing’: this is still expected to become a key service for advertisers but has still to become a mainstream function, partly due to the technology still being developed and data being collected, as well as the privacy issues that are raised once individuals realise how their data is being used to target advertising. The huge mass of data that’s being collected by search engines and other major web properties should provide highly targeted advertising opportunities but the balance between this and privacy concerns is still to be determined.

4) Content targeted advertising becomes the new PPC battleground: Google has made further improvements to the content advertising network for PPC advertisers in 2008, most notably with the introduction of Placement advertising, and with the use of display and video advertising options. This sector has not become a battleground as other PPC services offer weak alternatives, but with better data and reporting on Google’s own service, the content network has become a more accountable resource to extend the reach of this targeted form of advertising.

5) Mobile search finally becomes serious: the launch of the Apple iPhone at the start of the year and the new Google-apps phone some months later has marked the start of the mobile Internet in earnest. The range of applications seems to be limited only by ideas at the moment and so as these type of phones gain market share and become ‘the norm’, then companies need to seriously think about focusing part of their online presence to the mobile market. This has yet to happen in any significant volume but the signs are there and examples can be demonstrated.

Recent research by eMarketer has revealed the huge reach of internet use and confidence in ecommerce amongst the UK population.

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One of the most discussed and possibly hyped topics of 2007 was the continued rise of social networking sites, such as Facebook. However, recent news coverage of this sector now seems to be declaring that the popularity of social networking may be on the decline.

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