The Revolution Search Marketing Report: Is adCenter a Googlebeater? - Sponsored by Web Gravity

After a rollout in France and Singapore, and then the US, MSN adCenter
went live in the UK on 15 August following limited trials, and a number
of brands already have campaigns running. So does it live up to
expectations?

Search and media agencies have welcomed adCenter as a challenge to
Google's dominance, hoping for a viable alternative for client budgets.
And, feedback so far has been largely positive.

"It's very easy to use," says Paul Silton, account manager at
Starcom.

"It appears to me that they've done their research into what the clients
and agencies like about Google and Yahoo, and looked to implement this
into their own system."

In a side-by-side comparison with its rivals, MSN fares pretty well (see
table, p57). It matches many of the features they offer and, in the case
of Yahoo and Miva, it offers several more. It also features one
innovation, demographic targeting, which not even market-leader Google
offers.

TARGETING OPTIONS

MSN adCenter uses personal data from its 8.8 million MSN Hotmail and
10.3 million Messenger users in the UK, enabling clients to target
potential customers not only by the keywords they're searching for but
also by age and gender. "We already offered these targeting options on
the display side and agencies have seen an uplift in response using
gender targeting," says MSN Europe senior search media strategist Mel
Carson.

Emma Wilson, director of digital agency Harvest Digital, says: "We're
really excited about demographic targeting and are already seeing really
good value from it, especially with Tiscali. We're seeing that men of a
certain age group are performing better and it will enable us to
up-weight our bids."

However, she says the system is still learning, so it will take a while
before the agency can definitively say to clients that targeting by
demographic information will result in a percentage increase in
click-throughs or sales. It is also still fairly basic in terms of
targeting capability, but MSN is considering adding more options in
future, such as targeting by income.

Duncan Parry, director of strategy at search agency Steak Media, says
behavioural targeting isn't going to determine the success of a
campaign.

"The same campaign management techniques you use for Google and Yahoo,
such as tracking, testing copy, looking at landing pages - that basic
checklist a good agency should be following - still all count," he
explains.

Demographic targeting aside, there's a strong argument for all clients
spending money on search to be present on MSN. "I think the most
important thing clients need to know is that a percentage of the traffic
they used to get from Yahoo is now coming through MSN adCenter," says
Parry.

Yahoo used to provide the paid-search listings for search queries on MSN
Search prior to adCenter. Richard Firminger, regional sales director at
Yahoo Search Marketing (YSM), says: "We're advising advertisers that
they're going to see a difference of around 10 per cent between YSM with
MSN traffic and YSM without MSN."

It makes sense for advertisers to shift a proportion of search spend to
MSN, particularly as this can be some of the best-converting
traffic.

Many agencies find MSN Search traffic converts well. This was backed up
by research from WebSideStory in February, showing MSN search converting
click-throughs into sales at a 57 per cent higher rate than Google and
48 per cent higher than Yahoo. "It's too early to say whether conversion
rates for MSN traffic will remain as high," adds Parry.

But, it's important to point out that, at this stage, there are a lot
fewer advertisers live on MSN than on Google's or Yahoo's networks, so
click-throughs and conversion rates are bound to be more favourable as
there is less competition for popular keywords. "We're seeing incredibly
low cost-per-acquisition (CPA) rates on MSN. We're seeing almost a fifth
of the CPAs that we're seeing on Google, but it's early days," says
Wilson.

There have been a few minor teething troubles, as is often the case with
the launch of a new platform. "There were some implementation issues,
unfortunately, purely because it was a new service and a lot of the
staff that MSN had taken on were very new to it. The reps have been very
helpful, but they didn't always know what was happening because the
launch was so rushed," says Matt Lovell, search manager at digital media
agency BLM Quantum.

FULL COMMISSION

MSN's Carson says the firm has invested heavily in taking on new staff
and creating a team of search strategists. "Search is very
labour-intensive, so there is a big onus on my group to provide the best
level of service we possibly can to our agencies," he adds. MSN already
has a good reputation for customer service with agencies on the display
side and it is offering them the full 15 per cent commission on search,
despite recent moves by Google and Yahoo to cut commissions.

Many agencies believe MSN has a chance to differentiate itself on
customer service; an area in which Miva has always done well but Google
has faced criticism. Lovell says that, while there are still issues with
the interface, MSN is listening to agency feedback. "They've taken on
comments and done their best to make improvements, as and when you
request them, so it's getting better. Hopefully, within a few months'
time, you'd hope they would be at the stage where the interface is
getting to a similar level as Google," he adds.

MSN sits somewhere between Google and Yahoo, according to Parry. It has
launched some features that Yahoo doesn't offer, such as time-of-day
targeting, and advertisers can bid on plurals and singulars of words
separately, which is important as they can result in different
conversion rates. "Google is still number one in terms of user
interface, but MSN's interface is probably better than Yahoo's, which is
quite old now," he adds.

Yahoo is planning to launch a new interface in the first quarter of
2007.

Agencies believe it will look closely at what MSN has done and
potentially incorporate features such as demographic targeting. The firm
has yet to reveal details of the new interface, but it is expected to be
a major overhaul.

There is no doubt that MSN's entry will drive more innovation in the
market from all networks. "It's the first time in a while where you've
had someone new come in and really force the others to look at what
they're doing and say 'how can we stay at the top of the game?'," says
Lovell.

"The best thing about MSN is that it's trying to push the boundaries of
search. It's trying to take it away from simply 'you choose your
keywords, you put in a price, and everything else is left to chance'. It
gives you more of an opportunity to really target specific audiences in
a specific way at specific times."

While early feedback is encouraging for MSN, there is only so much that
advertisers can spend on adCenter. According to Silton, it will only be
a very small percentage of overall media spend because MSN only has a
limited reach in the search market. Google is by far the dominant
engine, accounting for 77 per cent of UK searches, according to
Hitwise's May figures.

MSN's Carson argues: "Our search share has grown enough for us to build
a business on and enough for advertisers to get a significant return on
their investment."

But MSN clearly has ambitions to grow its share of search. It will form
a central component of the forthcoming Windows Live interface, which
will, no doubt, be backed by a major advertising assault. "We hope this
will really drive our share," says Carson, adding that the long-term aim
is to roll out adCenter across its entire portfolio so that advertisers
and agencies can plan and manage campaigns across MSN Search, Hotmail,
Messenger, MSN.co.uk and Xbox through one platform.

Meanwhile, the key thing is for the firm to focus on growing its
reach.

Lovell believes that, in terms of reach, it will probably never hit the
scale of Google. However, he doesn't think that's such a bad thing. "It
becomes quite a niche opportunity where you can actually do a lot more
with your search and it could, potentially, be a big challenger for
Google."