Microsoft should sideline search, focus on strengths

Microsoft should sideline search, focus on strengths

Microsoft can't neglect search, but for the moment Google has that market sewn up

Microsoft can use its strength in software to improve its adCenter and the ad-delivery technology that it acquired with its purchase of aQuantive to chip away at Google's contextual-search-advertising market share, Rosoff said.

"If you can get out of the publishing business and focus on tools, you can sell to 100 percent of the market," Rosoff said. Microsoft could strike more deals like the one it did to provide advertising to social-networking site Facebook, instead of "building out a video site or a social network, which are high-cost, low-margin businesses," he said. "Microsoft could use the platform to sell advertising on all of them," he said.

In mobile, Microsoft not only has a more mature platform than Google with Windows Mobile, it also has a critical mass of developers that can build applications.

While Windows Mobile itself provides limited opportunities for advertising because it is not cross-platform, Microsoft could use developers to "create new, compelling content and applications" for mobile devices that would be "vehicles" for advertising, said Gartner analyst Andrew Frank.

However, Julie Ask, an analyst with JupiterResearch, said the mobile market is still "too far off the radar" to warrant heavy investment in the near term from Microsoft or any of its competitors.

Still, when all is said and done, the ultimate goal in advertising is to offer a "multichannel and multimodal" platform that customers can use to place advertisements wherever they want, Frank said.

For example, "if you have a video ad, you can traffic that against any number of channels -- mobile, IPTV, Web, [or] on a social media widget," he said. "The real battleground is who can bring all of this capability together in one simple dashboard-type interface."

With its broad investments, Microsoft already has a lot of the pieces it needs for this, Frank said. Putting them all together and using the expertise it has gained from its enterprise software business -- like knowing how to manage a multitude of products, platforms and partners -- could be key to solving its advertising dilemma, Frank said.

"When you're talking about large brands and managing lots of brands of advertisers across multiple channels, that's the kind of problem Microsoft is good at solving," he said.

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