AdCenter Case

1. You are Doug Stotland. What approach (or approaches) do you favor? Why?
First of all, being a successful (mostly visited) ad-agency on the internet requires high brand equity or brand recognition. The word Google has become a phenomenon of searching information on the internet. The majority of people do not search on Google because of its technical ability, but because of its strong brand image. If Microsoft is really looking for establishing its empire on online advertising sector, it might as well use its already established Windows brand name to penetrate to ad-clickers more effectively and quickly. It is known that not every internet user surfs on Google, but almost all internet users use computers running Windows operating system. According to cybernetnews.com/2008/07/02/, PC OS market is divided into: 90.9% Windows, 7.9% Mac; Internet Browser market: 73% Microsoft Internet Explorer, 19% Firefox, 6.3% Safari. With so much “Microsoft users”, adCenter can target everyone through placing ads on Windows components. The new version of MSN messenger already has Live Search button, but adCenter may further utilize the latest Windows Vista’s highly customizable Side-Bar. Text ads or banners could be placed on Vista side-bar according to the user’s demography. What’s more, internet retailers (Amazon, Facebook…) have been pouring millions of dollars on developing algorithms that measure one’s interests accurately. Compared to websites that are situated on the internet, Microsoft is in much better position of targeting prospective customers. Through every single copy of Microsoft Office’s connection to the Office Development center, they can have access to every single office file created by a user. By analyzing the content of the files, adCenter can target customers more accurately than almost anyone.
Second, although Exhibit 1 states that the growth rates of both Search and Display ads seem to have slowed down, but according to BCG Matrix mentality they have become “cash cows” (the total revenue has grown rapidly), that is to say that either means of ad promotion will secure stable revenues over the long run. Microsoft’s expertise or perhaps its core competence lies on display advertising. And in order to compete with such a strong incumbent – Google, adCenter should choose high differentiation. They should focus on promoting display advertising (banner) on the Live Search. Customer awareness will build up gradually over time. AdCenter should wait patiently. MySpace, world’s second largest social community (after Facebook), has a stand-alone instant messaging software called MySpaceIM for Microsoft Windows. This relationship should be highly utilized by adCenter and offer advertisers the grand choice of targeting specific demographic groups among 25 million MySpace daily visitors.
Third, the current ad import function for those who already have information on other search engines is way beyond average advertiser’s ability. Exporting files from Google takes 9 steps and another 6 steps to import it back to adCenter. With their programming ability, it should be piece cake for Microsoft engineers to design 2 steps method for those who would like to import ad information to adCenter, or even running ads on different search engines simultaneously.


2.) Suppose Microsoft goes forward with the deal with Digg. Where will adCenter be in 12 months?
As of June 30, 2008, there were 1,463,632,361 ( http://www.internetworldstats.com/stats.htm) internet users on the world. 0.23% (http://www.alexa.com/data/details/traffic_details/digg.com) of world internet users visited Digg.com daily. More than half of the users are from United States. AdCenter, with contextual ads placed on Digg.com for a year, will have its contextual ads shown to 123 billion visits. Although attracting users to its main Live Search engine; advertising through syndication or broad contextual sites are important for adCenter’s future, but clicks from 123 billion visits will definitely increase their revenue.