Commentary

Did Microsoft Just Pull A FAST One?

Well it didn't take long for news to hit of the first major search-related acquisition of the year. Yesterday, Microsoft announced that it was buying FAST Search & Transfer for $1.2 billion. Old-school search junkies might remember FAST from the days it ran AllTheWeb.com, before selling that property and other assets to Overture.

Today, FAST is focused solely on enterprise search, so this is not a distribution play for Microsoft. But my guess is better monetizing its distribution is its primary benefit.

The Fast and The Furious

In the past few months, Microsoft has been on a tear, signing a $500 million multi-channel deal with Viacom and inking a deal for CNBC to be its exclusive third-party ad reseller. And with its $240 million investment in Facebook and $6 billion acquisition of aQuantive last year, it's clear Microsoft is not satisfied with mere organic growth.

The flurry of deals Microsoft is making is reminiscent of Google's run a few years back, when it seemed like a month couldn't go by without the Big G announcing a new partnership or acquisition.

Too Fast?

The Google scramble, as I called it, worked because every move was made under the corporate mantra of "doing no evil" by holding the consumer experience in the highest regard. Over the last three or four years, Google has stayed true to its roots and built up a nice stable of assets to expand on its vision for search, ads, and apps.

Yahoo took a similar approach a few years back, building new platforms and products at breakneck speed. However, as the Peanut Butter Manifesto acknowledged, it tried to do too much without a cohesive strategy, effectively spreading itself too thin. Yahoo has since rebounded, realigning around core areas of specialization, shuffling its executive suite, and acquiring valuable companies like Right Media, but it lost crucial ground to Google in the search wars.

In looking at Microsoft's spate of deal-making, it's hard to say which side of the coin it will land on. On one hand, the recent deals reek of schizophrenia, as the company gobbled up an agency, an ad server, an ad network and a search technology, along with a bunch of representation rights -- with no clear unifying strategy beyond "investing in digital media." On the other hand, it does finally have the expertise to do something meaningful with these assets that it didn't just a few years ago, when it was primarily a software company.

Fast Track?

Led by Steve Berkowitz and Brian McAndrews, today Microsoft stands ready to capitalize on its stable of digital media platforms. Of course, its inherent challenge will be speed-to-market. It takes the company years to release a new version of Windows -- Live Search needs to be updated each day. Look no further than Google's "throw a beta at the wall and see what sticks" approach, for proof that, in the digital media world, speed trumps QA most days of the week.

That said, I have reason to believe that the geeks over at Microsoft can get it done. I'm very impressed with the Keyword Service Platform it just rolled out to give search marketers deep (and transparent) insight into query volume and trends. As search and digital media become more of a priority at Microsoft with each passing deal, I suspect we'll see more of the Windows and Office bench-strength moving to the Online Services and Advertiser and Publisher Solutions groups.

Fast Forward

Looking ahead, Microsoft seems to have its eyes on the media prize. Steve Ballmer's recent prediction that all media will be digital in 10 years raised a bunch of eyebrows, but I like his "Price Is Right" style of bidding here. And he's certainly putting his money where his mouth is with these latest deals.

While building a suite of products and relationships to leverage a digitally connected media landscape seems to be a prudent endeavor, I think Ballmer needs to come out with a tight, focused mission a la Google's "search, ads, and apps" to show everyone what all these acquisitions are building toward. Or maybe what he needs is an Apple-like rabid focus (or at least a perceived focus) on a few core attributes (in Apple's case -- "sleek" and "simple") to position Microsoft as synonymous with something other than software. Without it, neither the public nor Microsoft employees will be able to truly rally around him and his claim to digital media gold.

Back to FAST

So how does the FAST acquisition accelerate the path to digital media dominance -- or at least Google catch-up-edness? Well, in addition to its information management services for the enterprise, FAST has specific solutions for directories, portals and vertical content providers, etc. Admittedly, I don't know much about these products, but I'd speculate they're designed to customize the search experience for various publishers based on their audience and content. Bundled with Microsoft's some-hundred-thousand search advertisers, this seems like a pretty compelling value proposition to the Viacoms and CNBCs of the world.

If FAST can deliver a better SERP, Microsoft can increase its eCPM, which would help it sign more distribution deals or at least turn a profit on the ones it's done. And, if incorporated into Live Search SERPs, FAST could improve the consumer experience and begin to build some real search loyalty for Microsoft (beyond those who still can't figure out how to change their Windows defaults). For the folks in Redmond, that couldn't happen fast enough.
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