My apologies to all the Google fanboys, but the Super Bowl ad was really about Bing. Google’s now infamous ad spot during the Super Bowl — ostensibly about an American student who studies abroad in Paris only to fall in love with a French woman and eventually marry and raise a child with her — has garnered quite a bit of attention and speculation from the tech community. Explanations have ranged from “it’s a social experiment” to “it’s a PR damage-control stint.” One possibility that isn’t getting enough attention is the simple fact that Microsoft’s Bing service has actually gotten under Google’s skin and the rivalry is starting to really heat up.
Since CEO Eric Schmidt tweeted the day prior that the ad would air, pundits placed bets that the ad would focus on either the Nexus One smartphone, the Android platform on which that phone (and many others now) run, or perhaps some new venture the company is getting into that would make a TV ad a sensible promotional tool, such as the recently announced Buzz social media platform.
But this wasn’t the case. The ad was for its search product which commands 87 to 90 percent of its global revenue for the last several years. Google’s success may appear iron clad, but companies in Silicon Valley know how quickly fortunes can turn, and Bing’s dramatic rise is no exception. Additionally, since the market for search engines is already so saturated, one of the only angles of attack for Microsoft is to simply take market share away from competitors, namely Google. Make no mistake about it: a market share war is taking place in the search category, and the ad that ran last Sunday was a telltale sign.
According to StatCounter.com’s GlobalStats service, when Bing launched, it resurrected Microsoft’s now retired search product Windows Live Search and took it’s measly 1.87 percent global market share to a slightly less miserable 3.66 percent (as of February 2010) in less than nine months. The numbers for the domestic search market fare even better for Bing. ComScore reports that Bing grew its 8 percent back in April 2009 (when it used to be Windows Live Search) to 10.7 percent by December 2009 and 11.3 percent by January 2010. This doesn’t seem like a trend that will lose steam.
Net Applications, another web analytics group, mirrors the StatCounter numbers, with Bing’s 3.16 percent market share (as of January 2010) securing its spot as the third largest search engine on the web (behind Yahoo at 6.15 percent and Google at 85.35 percent).
When you combine this near-doubling of global market share with the fact that Microsoft and Yahoo struck a deal at the end of July that would allow Bing to power Yahoo Search (which already commands nearly 5 to 6 percent of the global market), there’s no doubt that Bing is growing in Google’s rearview mirror faster than the company could have anticipated. In fact, one could even argue that with Yahoo’s recent positive earnings report, the company has benefited dramatically from Bing, which has effectively given it’s search product a second lease on life.
Not only does the raw market data have its own story to tell, but we can also infer from Microsoft’s other ventures over the past several years that it won’t hesitate to launch massive advertising and promotional campaigns to further its position in any market. Let’s not forget how the XBox gaming platform took off from zero percent market share to becoming an immensely powerful force in console gaming on par with Sony and Nintendo. Yes, the product itself was a huge hit, but advertising played a vital roll in its success. How vital? The marketing budget to make the original XBox platform competitive was valued at $500 million while the follow-up XBox 360 had a $100 million marketing budget when it launched in 2005.
Bing is no exception to the ‘star treatment’ that Microsoft’s big new ventures usually get. In fact, industry reports have unofficially flagged Microsoft’s marketing budget for Bing at somewhere between $80 and $100 million.
Let us also remember Microsoft’s other, slightly less successful campaigns, like the more recent one featuring co-founder Bill Gates and comedian Jerry Seinfeld that left most audiences absolutely puzzled as to what the company was even advertising. That campaign cost $300 million. With figures like that, there’s no denying that Microsoft is willing to at least try and buy its way into markets.
Many believe that Google’s commanding market share leaves it no reason to feel intimidated, regardless of any “insignificant” percentage-changes in their competitors numbers. But glancing at Microsoft’s total advertising budget for all of its businesses, we see a company that is aggressively buying its way up the ladder, with advertising expenses totaling $1.2 billion in 2008 alone. This is a number that dwarfs Google’s marketing projects by a significant margin.
Not only has Microsoft invested heavily in traditional advertising for Bing, it has also engaged in a more holistic strategy, striking tactical deals that won them highly-visible toolbar placement, greater exposure through their recent deal with Yahoo, and through stronger PC sales that come pre-loaded with the Bing-friendly Windows OS. The latter was epitomized by the deal Steve Ballmer made public at CES in January — that Bing would be featured as HP’s default search engine on all their PCs worldwide.
If Microsoft is using PC sales and other deals as part of a highly tactical approach to promote Bing, then Google is certainly ready to fight fire with fire, as their Chrome OS and Android platforms — both of which obviously feature Google as the default search engine — are set to take even greater shares of their respective markets in the coming years. When we examine a greater range of these companies’ products, it becomes much easier to see the battle lines forming. It’s just fascinating that we’d see early indications of the upcoming clash revolve around search rather than the other markets.
Alas, this is perhaps what Google’s Super Bowl ad is most indicative of: fear. Fear not just that the two companies will fight for search engine market share, but that they will fight over everything else as well. While Microsoft swoops down from their high perch of Windows, Office, XBOX, and MSN/Live, Google has the spears and arrows pointed up, with obsidian points at the end, engraved with, “Chrome OS,” “Android,” and “Google Apps/Docs.”
More interestingly, last week brought news that Microsoft and NBC had entered into an exclusive deal whereby NBC’s online video coverage of the Winter Olympics would be featured on the MSN homepage. More importantly, Bing now has exclusive rights to index all of NBC’s footage, which Google cannot do. It’s no wonder that Google announced the following day that they had deployed a rugged, new StreetView snowmobile outfitted with a panoramic camera that will be shooting all around the Olympic ski resort of Whistler, British Columbia (ironically a popular destination for many of Microsoft’s execs).
It’s not that Google is deathly afraid right at this moment, but it is keenly aware that the two companies will continue to invade each other’s territory. Given Microsoft’s hawkish approach, paying for a $6 million TV ad to curb a skirmish preemptively makes a lot of tactical sense.