Microsoft's AdCenter May Fail to Topple Google From Dominance
May 3 (Bloomberg) — Microsoft Corp.'s new Web advertising software, three years in the making, may fail to crack Google Inc.'s dominance of the Internet ad market. — The AdCenter software will be demonstrated at meetings …
Context & Ripple Effects
Microsoft had signaled an intended search-ad-system launch in January, while an adCenter account-creation flaw showed that the product’s operational rollout mattered alongside its sales pitch. The May demonstration is part of Microsoft’s broader effort to pair search distribution with an advertising system.
Microsoft has also made MSN Search the default in Internet Explorer 7, giving its advertising push a distribution lever; the central question is whether that lever can create sufficient advertiser demand against Google’s established position.
First-order effects
- Microsoft must convert AdCenter’s demonstrations into active advertiser accounts and campaigns, while Google’s dominant position leaves it little immediate reason to alter its advertising offering.
- Advertisers gain a Microsoft search-advertising option, but face the added work of evaluating and managing another campaign platform.
Second-order effects
- Microsoft’s Internet Explorer 7 search default ties AdCenter’s prospects to MSN Search usage: greater search distribution would create more inventory to sell, while weak usage would limit the platform’s appeal to advertisers.
- Google’s market position raises the cost of Microsoft’s challenge because AdCenter must establish both advertiser participation and a meaningful audience for those ads.
Third-order effects
- Search advertising is becoming a gatekeeping contest in which browser and search defaults can shape who controls advertiser access to users, not merely which ad software has the most features.
- If large platform owners continue to bundle distribution with ad systems, advertisers may face a market organized around a small number of integrated search-and-advertising networks.
The trend: Web advertising is moving toward vertically integrated platforms that combine user-distribution channels with tools for buying and serving ads.