• by Joe Marchese , October 2, 2007

The new arms race between Microsoft and Google will change the face of advertising forever, and it's a good thing for the Internet ecosystem. There is no way Microsoft will ever give up on search, nor should it. But it certainly seems to have taken to heart an old adage with a new twist: If you can't beat 'em at search... make search less valuable (you didn't really think I was going say "join 'em," did you?). A great piece in The New York Times last week, Louise Story's "Microsoft Takes Aim at Google's Ad Supremacy," gets at the core of Microsoft's ambitions.

From the piece: "[Microsoft's Brian] McAndrews contends that search engines, which long have claimed credit for sending people to companies' Web sites, do not deserve it all... 'We're emerging, but we're also looking to redefine the way online advertising gets done, because we have so much smaller a footprint than the two market leaders,' he [Microsoft's chief Steve Ballmer] said, referring to Google and Yahoo. 'This is a chance to invest in, or to reinvent and rethink the whole business model of online advertising,' he said."

The goal is simple, and amazingly intuitive to anyone in the ad industry: All Microsoft has to do is prove the value of all other marketing messages delivered prior to the action of searching. This is the No. 1 reason Microsoft bought aQuantive. If Microsoft figures out the more efficient way to assess the value of non-performance-marketing message delivery, Microsoft can then deliver higher value to marketers, while simultaneously delivering higher monetization to quality Web sites. Combining these two things would theoretically allow Microsoft to catapult past Google in the race to unlock brand dollars. I say theoretically, because the key areas of efficiently creating and effectively delivering brand advertising to fragmented media (the more common theme of this Spin) is quite a leap from the first step of properly assessing the value of non-performance-based advertising.

This first step would, however, immediately decrease the ROI credited to search, and therefore, potentially, budgets. Microsoft isn't the only one that knows this. And its strategists aren't the only ones making some pretty significant breakthroughs. I referred last week to Marketing Evolution's work to properly assess the value of search in overall campaigns.

And don't think for a second that Google doesn't know the risk of someone else exposing the overvaluing of search better than anyone. DoubleClick's acquisition was made to address exactly this play. And Google has many advantages in the looming display measurement arms race.

It may seem counterintuitive that Google would want to devalue search. But the reality is that Google simply takes a sustainable ecosystem approach to creating marketplaces. It understands that proper measurement, and credit where credit is due online, will be the key to completing the brand advertiser/ Web publisher ecosystem. Google also has something Microsoft doesn't; the AdSense network. While Story's piece drives at the ability to properly weight all marketing messages delivered prior to search helping to enhance the value of portals like MSN, most of the major portals are already monetizing at rates similar to television or exceeding television. The real opportunity is everywhere else on the Web -- especially social media. Which brings us right back to effective creation, execution and distribution of the campaigns being the necessary "chicken" to effective measurement's "egg."

Where this is all heading, and the big win for whomever gets there first, is being able to track all marketing messages that hit an individual, online or off (see: Google's patent and work on a device that "hears" what ads you might be exposed to on TV) and track them through to sales, both online and off (see: loyalty programs tied into online cookies). While these capabilities are a long way off, the ability to tie together all of the marketing events that led to a consumer's online action will inevitably make search share some of its online glory, Google's search division just hopes it only has to share with its GoogleClick division.

Regardless of whomever gets there first, the end result will likely not be a massive shifting of budgets from search to display, but rather a significant increase in overall budgets dedicated to media and campaigns that can be attributed to driving search and other performance actions even indirectly, be they video, social media, television etc. If search has taught us anything, it's that if you make it accountable, the advertisers will come.