Geek In Disguise

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Steve

I can't help but think Greg's quotation is actually a load of old tosh.

With the multi-billion dollar investment and acquisitions MS has made recently in advertising and tying up with what Mr. Ballmer was saying about how Microsoft wants a % stake in the  $60 billion global advertising market, I just can't see how search alone is going to bring in the return that a $240 million investment requires.

On a simple level, it would require a fundamental shift in they way Facebook operates. I refuse to say the words "closed is the new open" but in this case I am ashamed to say it is relevant. ;-)

Has Microsoft, with its 1.6% stake really got the influence over Facebook to push for the implementation of Live Search thereby allowing users to go and find content OUTSIDE of Facebook? I don't think so. Facebook search might not be rocket science compared to Google but no search engine can understand Facebook better than that designed by the site's very founders - especially not one which has taken such a pasting in terms of its ability to provide relevant results as Live search.

Let's be honest, however good or bad Live search is, it has taken such a bashing by the critics that it is going to take a hell of a job convincing Facebook to permit its use as the search facility of choice.

Don't get me wrong, I am not bashing Microsoft, I find myself enjoying almost all the Live product suite - except search, because it quite simply doesn't give me the results I know Google does. That said, Microsoft has bought itself into a significant position. Almost no other global players now have the ability to build a search and advertising platform based on our behaviour around social objects better than Microsoft does now.

I see Microsoft benefitting from the Facebook deal in one of three ways:

1) The Google Effect - cashing in

They hold out to see if Orkut bombs and Google decide it is better to buy Facebook at an inflated value than to miss out entirely. Microsoft then cash in their chips after learning how to advertise based on social interaction...unlikely.

2) Live Search and Social Context PPC - getting more revenue out of the same search

Microsoft learn about our interaction around "Social Objects" on social networks from everything they gleam out of Facebook. They then spruce-up Live Search to show far more relevant PPC ads based on so much more than keywords alone...getting wamer but unlikely...their portion of the search market is too small to generate the return that their investment would require. It is still PPC after all and there is a far wider use of the data going on in Facebook than better-targeted PPC can deliver.

3) Revolutionalise Online Advertising

As above but the resulting advertising solution they create will be as revolutionary to online contextual advertising as adwords/adsense (arrgh!) was to conventional banner ads...there you go, that's where the money is!

Microsoft learn to target ads based on much more than basic demographics or site visitor numbers and make an absolute killing.  They become the only people in the world who can provide an ad delivery system that is targeted according to information on social aspects in our life. In fact, so much so that a) we don't mind the ads appearing in our social networks and b) actually find the ads interesting (ok, maybe I went a bit too far on that one!)

If MS have bought into Facebook because of this last point, then I think we are in for a very exciting time. After all, look how much information we can already gleam from Facebook Flyers Pro...this is only the beginning.