The Bing Bang

Online retailers hope Microsoft can expand the search universe. Will it succeed?

Search engines account for much of the traffic to retailers’ web sites, and Google dominates search. That means any challenge to Google’s near-monopoly position in search is big news—and potentially good news—for e-retailers.

Google today faces a big challenge indeed, from software giant Microsoft Corp., which threw down the gauntlet June 3 with the launch of its new search engine, Bing. Microsoft is backing up Bing with a major national advertising campaign, has cut deals to make Bing the default search engine on millions of PCs and mobile phones, and says it’s willing to spend billions more to gain search market share.

And there’s one more reason to believe Google finally has a worthy competitor: Microsoft just might have built a better search engine.

Instead of just providing a list of links to web pages, Bing’s search results page categorizes results, makes it easy to refine queries, lets users track queries, provides a glimpse into the web page listed, and summarizes the content of consumer and expert reviews from across the web.

“It’s very cool to see someone making a bold move forward in search,” says Eric Archuleta, CEO of online musical instruments retailer Musician’s Hut. “I’m a fan of Bing. It’s helpful to me to find more information, instead of just an index. It’s going to be a great tool for shoppers.”

He’s not alone in praising Microsoft’s work. Bing “will so improve the search experience that users will demand other engines follow suit,” wrote analyst Shar VanBoskirk of Forrester Research Inc. in a recent report entitled “Bing: The Next Big Search Thing.”

Retailers are also high on Bing for another reason: It could give them an alternative to Google for paid search, and prompt Google, Microsoft and Yahoo to court marketers’ dollars with innovations and better pricing.

“We’re very excited at the way Microsoft’s been aggressive with Bing,” says Reggie Geissler, Internet program manager at Mason Companies, which operates ShoeMall.com and other e-commerce sites. “Google does very well for us, but it’s nice to have other avenues to pursue.”

“I don’t think they’re ever going to knock Google off its pedestal, but Yahoo’s not doing a good job of pushing Google right now,” says Andy Schepper, vice president of operations at multichannel retailer Summit Sports Inc. “I’m excited that somebody’s trying to be innovative, and not just copying Google.”

But even e-retailers who find Bing appealing say it will only be significant if it can cut into Google’s market share. “It’s a good search engine,” says Eric Klose, vice president of marketing at online retailer CSN Stores LLC. “The real question is can Microsoft get consumers to use it.”

Billion-dollar budget?

Microsoft executives say they will, but that it will take time. Meanwhile, they are backing up those assurances with money. Big money.

CEO Steve Ballmer, speaking before the Executive Club of Chicago shortly after Bing’s launch, said Microsoft is willing to spend 5% to 10% of its operating income over the next five years building its search business. Given that the company’s operating income for its most recent fiscal year was $22.5 billion, that translates to an annual investment of at least $1 billion, and possibly more than $2 billion.

While those are big numbers, they pale before the $47.5 billion Microsoft offered last year to buy Yahoo Inc., including Yahoo’s second-ranked search engine. Rumors spread last month that Microsoft and Yahoo were again discussing a deal that would give the combined companies a 25% share of the search market, enough to mount a credible threat to Google. Such a deal would likely mean Bing becoming the search engine on Yahoo’s popular web properties, says Danny Sullivan, a search engine expert and editor in chief of the Search Engine Land blog.

Whatever happens with Yahoo, Google and Microsoft have each other in their sights. Google is going after Microsoft’s core business by introducing web-based applications that compete with Microsoft Office and announcing plans for a PC operating system to challenge Windows. Microsoft is trying to grab a big slice of Google’s core search franchise with its efforts to buy Yahoo—and now with Bing.

With these two companies both ranking in the top 10 among publicly traded U.S. companies in stock market value—Microsoft was second at $215 billion in mid-July and Google tenth at $135 billion—the battle unfolding for search market share could be the most expensive in the history of the Internet.

Bing, by default

Well before Bing’s launch, Microsoft began reaching into its deep pockets to cut important deals to make sure its search engine would be the one that automatically comes up when consumers fire up new PCs.

While many assume that Microsoft’s search engine would automatically appear in the company’s dominant Internet Explorer browser, which controls 66% of the market according to software provider Net Applications, that’s not the case. To avoid antitrust complaints, Microsoft makes it easy to change the default search engine in Internet Explorer, and Google and Yahoo in recent years have paid PC makers to make their search engines the one that ships with new computers.

But Microsoft has been outbidding competitors recently, signing a deal with Hewlett-Packard last year and with Dell this year to make Microsoft’s search engine—previously Live Search and now Bing—the default on more than half the new PCs purchased in the U.S. And Microsoft announced a five-year deal in January with Verizon, the No. 1 provider of mobile phone service in the U.S., to make Microsoft the default search tool for Verizon’s 86 million subscribers.

While tech-savvy consumers will download competing browsers, notably Firefox, or switch the default search engine on Internet Explorer to Google or Yahoo, consumers who are older, less educated or recent immigrants are more likely to use the default engine when they launch Internet Explorer on a new PC, says Bill Leake, CEO of search marketing firm Apogee Search.

“That means retailers that cater to older, more diverse and subprime categories of consumers will probably do disproportionately well on Bing,” Leake says.

More of The Daily Show

Microsoft also aggressively promoted Bing during the Internet Retailer Conference & Exhibition in June, with a prominent, 400-square-foot booth and several event sponsorships.

Meanwhile, Microsoft was embarking on a national advertising campaign featuring TV, radio, print and online ads. The ads refer to Bing as a “decision engine,” and focus on how Bing quickly gets the information desired to the searcher.

One of Bing’s first TV ads appeared on The Daily Show, a late-night program that appeals to younger consumers. The ad fast-forwards through a series of ads for various products, then concludes with the text: “Getting to what you want faster. It’s what we’re all about.”

The ad runs only 30 seconds, though Microsoft bought two and a half minutes of air time. The program resumes after a voiceover informs viewers they are “getting two more minutes of The Daily Show because of Bing.”

Microsoft declines comment on published reports it will spend $80 million to $100 million promoting Bing. But CEO Ballmer, speaking at the All Things Digital conference in June, said the company plans to spend “lots” on marketing.

As the back-to-school and holiday shopping periods approach, that ad spend increasingly will focus on encouraging consumers to try the Shopping section of Bing—one of six areas highlighted on the Bing home page, along with Images, Videos, News, Maps and Travel—according to Dave Wascha, senior director of Bing Shopping and Cashback, Microsoft’s year-old rebate program that prominently promotes participating merchants in Bing Shopping results. He also says Microsoft promotions will encourage consumers to try Cashback.

Bing and Cashback

Archuleta says Musician’s Hut is going to try Cashback, a product of the 10% jump in traffic from the Bing engine that the e-retailer registered in June. That persuaded him to commit to the expense of feeding data to another marketing program, an investment that hadn’t been a high priority before Bing.

Microsoft, which launched Cashback last year based on technology it acquired when it bought Jellyfish in 2007, pushed to recruit merchants to Cashback in advance of the Bing launch, says Microsoft’s Wascha. He says more than 800 merchants now participate in the program, in which retailers set a percentage discount on each product, and Microsoft sends a check for the discounted amount to consumers who buy through Cashback.

A problem that bedeviled Cashback was fixed in advance of the Bing launch. When a consumer clicked on a retailer’s Cashback offer the next page he saw was a Cashback sign-in screen. Confused consumers often abandoned the purchase. Now a greyed-out image of the retailer’s page appears behind the sign-in box, cueing consumers that they are on the right track.

“The initial interstitial page had a pretty poor performance,” Wascha says. “Now performance is significantly better.”

Despite their aggressive marketing efforts, Microsoft officials downplayed expectations that Bing would quickly gain market share. And Bing made only small gains in its first month. Microsoft’s share of U.S. search queries rose from 8.0% in May to 8.4% in June, while Yahoo fell to 19.6% from 20.1% and Google held steady at 65.0%, according to web measurement firm comScore Inc.

In terms of clicks from paid ads, the results were mixed. Apogee Search followed 10 retailer clients in June and found Google easily bested Bing in terms of gains over the prior month. But web traffic monitor Compete showed Bing’s share of referrals from search ads rose to 5.6% in June from 3.1% in May, and search marketing firm Efficient Frontier reported a 5% increase in Bing’s click share in June over the month before.

“With the launch of Bing and its early signs of promise, the battle between search titans is once again heating up,” says David Karnstedt, president and CEO of Efficient Frontier.

Other early studies indicate consumers like Bing, but don’t see a need to switch from Google.

A July survey of more than 750 U.S. consumers found 59% had heard of Bing and 25% had tried it, reported stock analyst Imran Khan of J.P. Morgan, which commissioned the poll. And while respondents gave Bing high marks, nearly 63% said they were satisfied with their current search experience. “It will be difficult to shift search behavior if people are completely satisfied with their current search engine,” Khan observed.

In a usability test with 12 individuals given two search tasks to perform on Google and Bing, most preferred Bing’s visual design and considered Bing slightly better in terms of organization and refinement options—yet eight of 12 planned to stick with Google. “A little better isn’t enough to get people to switch,” says Nick Gould, CEO of the web design and research firm Catalyst Group, which conducted the test.

These results do not faze Microsoft executives, who emphasize that they are in this race for the long haul, and that Bing will continue to improve. One example: Bing recently began including in its search results Twitter messages from celebrity Tweeters. “This is just the beginning,” says Microsoft’s Wascha. “There’s a ton left to do in the world of search.”

And tons of dollars to be spent by Microsoft and Google as they try to outdo each other through innovation. The unprecedented level of competition and innovation in search that looms on the horizon can only benefit online retailers. l

don@verticalwebmedia.com

How Bing is different— and some early SEO lessons

Bing presents search results in a new way. Here are a few of the differences with Google:

Instead of just listing links to web pages, results are organized into categories. A search for “digital cameras,” for example, includes sections such as Digital Camera Brands, Digital Camera Types and Top 10 Digital Cameras.

Hovering the cursor over the right side of a link pops up a box that provides a glimpse of what’s on the page the link goes to. In some cases, links to retailer sites display products and prices in that box. Bing often shows the retailer’s customer service number.

On the left side of the page is a column that Microsoft calls the Explore Pane, designed to help users refine searches quickly. On the digital camera results page, there are links to Shopping, Brands, Types, Top 10, Repair, Accessories and Images. Below that are links for Related Searches, including links to brands like Canon and Sony, to retailers like Wal-Mart Stores Inc. and CircuitCity.com, and to sites that compare and rate digital cameras. At the bottom of the Explore Pane, Bing tracks the user’s search history, making it easy to return to an earlier results page.

Clicking on the Sony Digital Camera link produces a page displaying images of four popular Sony cameras, with ratings and price information for each. A click on a camera leads to a page that shows the item’s price at several e-commerce sites, along with tabs for user and expert reviews and product details.

A click on user reviews leads to a page in which Microsoft, using technology that extracts consumers’ opinions from reviews posted across the Internet, summarizes how the camera rates on affordability, ease of use, focus, photo quality and speed.

As the user moves to a new page, the Explore Pane offers refinement options relevant to that page. For instance, on the page for the Sony Mavica camera there are links to batteries, parts, instructions and repair information for that item.

Bing quickly and clearly provides the information a consumer wants as she searches—product details, reviews, prices—and links to retailers offering the item, says Robert Murray, CEO of search marketing firm iProspect. “Everything’s clean, compact and right in front of you,” he says.

Murray advises retailers to pay attention to Bing’s refinement options in order to move higher in search results. For instance, if a results page for Sony cameras displays a refinement option for lenses, a retailer that sells those lenses should include “Sony lenses” in headings and titles for relevant product pages so Bing can easily find those pages.