Posted by Shar VanBoskirk and Sarah Rotman Epps]

Media outlets report that Microsoft and News Corp are in talks about an exclusive relationship, where Microsoft would pay News Corp to remove its content from Google and allow it to be indexed only through Microsoft's Bing.

My colleague Sarah Rotman Epps and I put our heads together on the potential deal. Here is our take:

News Corp’s short-term desperation will sabotage its long-term interests.  Everyone is watching newspaper companies lose more ad revenues as subscriptions fall even lower in 2009 than the declining trajectory they have been on since 2000.  Getting consumers to pay for content is a hard sell; media companies may have an easier time generating revenue by licensing their content to other companies, like portals, device makers, and non-media companies like Fidelity who need content for their Web sites. Murdoch wants a deal like this to get MS to pay him for the opportunity to index his companies' content. But the tradeoff for short-term revenue could be long-term irrelevance: If consumers don’t find Newscorp results in Google searches, they’ll just click on another content source. “If a tree falls in the woods…” could be rephrased as “If a site isn’t indexed by Google, does it really exist?” For the 65% of searches relying on Google, the answer is no.

Microsoft wins publisher goodwill, but probably not much search traffic. Bing has enjoyed growth in its share of searches since its launch in summer 2009, but it still accounts for only about 10% of searches compared to Google's 65%.  So Microsoft needs to do everything it can to try to gain search traffic. I see this as another way to try to drive searchers to use Bing instead of other possible search engines. But stealing one content source from Google won’t be enough to change consumers’ search habits.

Consumers don't care about a deal like this.  Consumers do not expect search engines to be exclusive.  In their minds, search engines are gateways to answers, and if they can’t find something through search, it may as well not exist.  So, while News Corp and MS might enjoy scratching each others backs in a deal like this, consumers won't know and won't care that Bing is the only place they can find Wall Street Journal articles and other News Corp content.

Most content doesn't have enough value for exclusivity to matter.  A number of reporters have asked me if this is the beginning of something big in terms of media/search engine deal.  My take is no way.  Because frankly content is plentiful and cheap and consumers are very good at finding what they need without having to pay for it or be inconvenienced to get it.  So while News Corp may have some content that still qualifies as "exclusive," I don't see many other media firms having any leverage to create similar deals with search engines.

See Forrester's blog for Consumer Product Strategy Professionals for additional take on this deal and others affecting the media industries.

I dedicate this blog post to anyone who has read Forrester’s interactive marketing forecast and thought, "well that’s great, but how are interactive marketers in *my* industry spending on interactive tools." I’ve just published the US Interactive Marketing Forecast By Industry, 2009 to 2014 which splices our interactive marketing forecast by 12 different industries including:

Retail and wholesale trade

Financial services

Lead generation

B2B

Travel

High-tech

Automotive

Heath and pharmaceuticals

Consumer goods

Media and entertainment

Telecom

And an "other" category which includes primarily education, government and non-profit businesses

A few takeaways from the research:

Direct marketers spend the most, but brand advertisers have the most growth potential.  Look for the steepest growth to come from traditional advertisers who are under invested in interactive marketing today.

Advertisers should benchmark against their own peer set.  Industry benchmarks are helpful (the report includes some per-company budget estimates for different industries).  But don’t presume your interactive budget should always match industry averages. We recommend adjusting your spend according to how online you business model and your customers are.

Stay tuned for deeper dives into retail, financial services, consumer goods and travel interactive spend in subsequent pieces of research.

Last night Microsoft launched a new look and feel for msn.com to a limited number of consumers.  The new design will roll out to the mainstream in January.

Forrester got a sneak peak of the new-and-improved interface in October.

 

Here is my take on the redesign.  It:

Limits clutter.  Perhaps the best thing about the new msn.com is that it is simply cleaner.  MS says it has 50% fewer links than the old msn.com.  As part of the clean up, MS removed the left hand navigation and turned the top nav links into five customizable tabs.

Integrates personal social experiences.  The idea of the new msn.com is to make it a "personal portal" where people can come to "infosnack" on their preferred news, communications and community fix.  I like the facebook and hotmail integration shown here, but I think all portals are facing a strategy challenge as consumer media behavior changes.  That is, consumers no longer *want* to come to a single source for news, communications and community.  We, in fact, want these syndicated to us across the multiple sites and devices we use.  So while I think integration of new types of content is imperative for MSN.com, I don't think it completes users' overall quest to have their online needs met.

Will increase content distribution relationships.  To the above point,   This means, MSN should increase the network of content providers, sites and devices it shares content with.  We hope MSN's rev after this one shares MSN proprietary content more universally across devices and sites (yes, esp iPhones and iTunes) and allows consumers to add in feeds for digital formats of books, video, music, or games into their customized msn.com.

I’m just back from Dallas where I was part of the iProspect/Range Online client summit — a one day event of mostly client stories (from a high profile list of marketers) about their successes and woes this year. Overall, I found the event provided a great pulse on present interactive marketer challenges.  But it was less rife with answers or solutions to these challenges.  Maybe that was by design as the answers are what Range and iProspect will now spend the next several months developing for their clients? 

In any case, I did hear some very interesting things throughout the day.

The first session — a panel featuring Kaiser Permanente, Genesco Retail, Radio Shack, Jones Apparel, and adidas America introduced a theme that was carried throughout the day: That one of the greatest challenges for interactive marketers today is getting support and cooperation from their traditional brand marketing colleagues.

I actually couldn’t believe that this pain came up as repeatedly as it did and seemed as paralyzing as it did for the panelists and members of the audience who joined the discussion.  I was expecting current marketer woes to focus on the economy, data challenges, or even sorting through emerging media options.  These topics did get addressed throughout the summit, but they were always couched within the notion of "how do we better foster a corporate mindset that supports interactive?"

How big a problem is this for you?  Do you find that your interactive efforts often don’t get realized as fully as they could because you don’t have corporate support for them?

My thought is that organizations buy in to interactive marketing in theory, and there are even great examples of interactive champions doing great things out there from firm to firm.  But culturally, most companies are not "interactive" at heart.  Like we could comfortably call P&G or Ford a big brand advertiser…but would we identify anyone an "interactive marketer?"  Should this be a label or a culture companies strive for?

What will have to happen for entire companies (not just portions of a marketing team) to give over to an interactive philosophy and the type of customer relationships and business decisions that go along with this philisophy?

Yesterday Yahoo! announced enhancements to its search advertising business and consumer experience.  These enhancements include the following:

• Enhanced reporting — Advertisers will now be able to see how their search ads are performing on Yahoo.com compared to partner sites also serving Yahoo! search ads

• Control over network bids and messages — Starting next year, advertisers will be able to bid differently for ads showing up on Yahoo.com compared to those that might show up on partner sites.  As a part of this, advertisers can also target different messages based on the sites where their ads might run.

• Enhanced self-service tools for advertisers who need dedicated campaign management tools.

• Integrating rich ads into Panama — Yahoo! has been trialing rich search ad formats which include video and image enhancements to regular paid search listing with selected brand advertisers.  But the process to date has been a negotiated one that is much higher touch than the process for buying regular keyword ads.  Integrating rich search ads into Panama will enable them to be bought on a bid-for basis and as part of other (non-rich ad) search campaigns.*

• Sites running as part of Yahoo!’s BOSS program will be eligible to distribute and share revenue from Yahoo!’s paid search ads.
  
  

• Price controls — Yahoo! will adjust its pricing model a bit to allow it to set pricing floors or ceilings in order to better value traffic for what it is worth.
  
  

• A focus on improving relevance of search results — Yahoo! has a new interface for delivering search results and is also dialing up emphasis on delivering intent-based search results.  The idea here is that the search engine would use information about your past searches, searches like your’s and what others have found relevant in order to deliver results that fit your need, not just a list of pages that could match a given keyword. 

My take is that these are much needed but not comprehensive improvements for Yahoo!.  Marketer and consumer expectations for search are only getting higher, so Yahoo! (and all search engines) must continually innovate to improve the advertising and search results experience they deliver.

The most interesting developments to me are the ability for advertisers to control their bids and messaging for different places their ads will run.  And, the notion of Yahoo! regulating pricing to keep bids in line with value.  I think these both play to the science of paid search.  That is, how advertisers should optimize their budget and message in order drive the most profitable traffic (not just drive the *most* traffic). 

*Note: Rich search ads are still only available to select brand advertisers as selected by Yahoo!