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MSN To Launch Its Own Paid Listings Program

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MSN is officially announcing today during a annual gathering of its most important advertisers that it will enter the paid search arena with a full-blown self-service paid listing program similar to those run by Yahoo and Google. It will be tested in France and Singapore within the next six months. The date for a worldwide rollout has not been set.

It's been long expected by myself and others that MSN would establish its own program, something that's seemed inevitable once Yahoo announced it would purchase Overture in mid-2003. The move meant Overture -- which had been providing paid listings to both Yahoo and MSN -- effectively lost its "neutrality" and really couldn't continue to be a long-term partner for MSN.

In addition, MSN had already decided at that point in 2003 to build its own crawling technology to produce editorial listings. Developing a paid listings capability to go along with this seemed almost a requirement, given that its competitors Google and Yahoo had their own. My Yahoo To Buy Overture article from 2003 looks at this more.

Developing The Program -- And Ad Platform

At that time, I thought it might be likely that MSN would acquire its paid listings capability through a purchase of someone like FindWhat. Instead, the company decided to build one from the ground up. MSN says the decision to build internally was made in October 2003.

MSN also says it has built more than just a paid listings program. The company has constructed an entire ad management platform called MSN adCenter, of which the paid listing program is just the first program it wants to manage through it.

When I talked with MSN about its plans earlier this month, those involved with the project stressed that they see the platform as a one stop shopping-style solution for advertisers who wish to purchase all types of MSN advertising in one place, search ads and other things that may come.

As for that paid listings program, it's been known internally under the name of Moonshot, a name that leaked out earlier this year. However, MSN says no public name for the program has yet been determined.

Wider Rollout Date Not Set

The paid program will first open in France and Singapore sometime within the next six months. MSN said France was chosen as being a sizable market but one not so large as to be overwhelming, as would be the case with the US or UK. Singapore was selected because MSN wanted to also test in an English-speaking market where there wasn't a competing self-service program in place and where it solely owned the MSN site (as opposed to the situation in Canada or Australia).

How about launches beyond these two countries? MSN isn't saying when that will happen. Given the six month horizon we already have, I'd say don't expect this until the end of the year, at the earliest. MSN has no need to rush. Its deal with Yahoo for paid listings runs through June 2006.

That doesn't mean the program can't start before then, of course. Typically, these agreements seem to have wiggle room. MSN stopped using both LookSmart and Inktomi results before agreements involving those expired. But it does mean that we'll almost certainly see MSN's own program running on the flagship MSN.com site's search results by July 2006.

Similar to Google, the program is set to operate on a broad match basis, but advertisers will also be able to target specific words and phrases, plus have exclusion options. Bids will begin at US $0.05, I was told.

Beyond both Google and Yahoo, the new MSN program will offer features such as dayparting, geotargeting and demographic targeting of ads based on age group or lifestyle.

Another feature of the new ad toolset is the ability to spider your web site to a depth of two levels, in order to automatically extract terms from your content you may wish to purchase.

Until the new program rolls out, MSN is continuing with its long-standing Featured Sites in the US, where advertisers spending at least $75,000 per month can get top placement for terms they want to target, above any of the results provided by Yahoo.

When the program emerges widely, I'd expect it to still use Yahoo as "backfill" results in the short term. In other words, it will take some time for new advertisers to get set up, migrate terms, establish creative and so on. Abandoning Yahoo entirely would mean potentially missing some paid listing coverage. Instead, using Yahoo as backfill means that MSN will have some "backup" paid listings that can kick in until its program is fully subscribed.

The program will also be a major milestone in search marketing. We've never had a major search engine unveil a paid listings program like this. Yahoo's program grew slowly over time from its GoTo roots. Google's program also grew before that search engine had significant traffic. In neither case was there a situation where thousands of advertisers all at once wanted to flock into the new program.

That's the challenge MSN will face. If it were to roll out its program in the US tomorrow, thousands of advertisers would want to immediately list millions of keywords in total. Given this, it seems likely that any US rollout will likely be done in stages, with perhaps large advertisers migrated in first, then additional advertisers accepted to ease the load on the system and support personnel.

Greater Targeting Will Mean Automation A Must

The setup I was shown for this was seriously impressive in terms of the amount of targeting control you can exercise. Want to pay more for ads to show up for a certain period of the day? No problem. Want some creative to be shown to women; other creative shown to men? It's there.

In fact, the capabilities were so extensive that my biggest thought was that anyone not using automation to handle their ads now will be required to, if they are running any type of sizable campaign.

Indeed, many advertisers already find it difficult enough to manage thousands of keywords and bid on just two providers. Now comes a third provider that will greatly expand the targeting options. The other two will likely have to expand as well, making ad management that much harder unless there's an automated assist.

How Targeting Is Done

It's great that all these targeting options are being offered, but how will MSN really know the demographics of those seeing ads. Targeting will tap into MSN's registered user database, which lets it know the profile of those who've enrolled with the service. Even if they aren't signed in, the presence of an MSN cookie will let MSN know who is performing a particular search.

Of course, that targeting isn't entirely perfect. People who lie when filling out member profiles might be mistargeted. Or if my wife uses my computer, she'll see ads targeted to a man, since MSN will assume that it's me coming to the site. Also, plenty of people won't have registered, making targeting them difficult.

Difficult, but not impossible. MSN says it will also perform profiling of cookied individuals who have never registered. If your actions make it seem strongly like your a woman, then it will eventually assume you are and target ads to you that way. Ultimately, of course, if MSN can't properly guess, it will fall back to whatever the "safe" generic targeting option has been set up.

Impact On Yahoo & Google

What's all this mean for Yahoo? Obviously, it's set to eventually lose a chunk of income it gains by providing paid listings to MSN. However, despite some analyst quotes I've seen, it's not going to somehow lose advertisers themselves. Neither is Google.

Advertisers are not going to flock to MSN and abandon the other two, because the only way on the sizeable networks the other two operate is to stay with them. They have non-duplicated pages views.

If there was so much search traffic that MSN could supply all an advertiser's needs, then we might see defections. But that's not the case. Advertiser after advertiser I've talked with says they can't get enough search traffic now. That's one reason they go into non-search contextual ads. They've got money to spend but not enough search inventory to spend it on.

Instead, MSN is going to be the new third program most everyone will likely feel it's essential to enroll in. That was certainly the case when I asked a room of about 400 people at SES New York earlier this month what they'd do if MSN launched its own program, as was rumored during the show to be coming. Virtually everyone said they'd sign up. And virtually everyone said they'd stay with the other two, as well.

It's also important to remember that the change isn't going to somehow add more search inventory to purchase. The "pie" of searches out there isn't getting bigger just because MSN will have its own program. The pie will simply be divided so that MSN has its own actual piece, when it comes to paid search. That slice will be cut off the piece Yahoo has. Google's piece will stay the same.

For the record, MSN is saying it will still continue to work with Yahoo, calling the company an "important, strategic partner to MSN in more than just paid search." I interpret this to mean that MSN will keep working with Yahoo in any area where it doesn't have its own ad capability itself, such as the current partnership for contextual ads.

Finally, might MSN find itself getting sued by Yahoo over paid listings, one analyst has asked. Yahoo has patents involving paid listings and won a settlement with Google over them last year. I asked MSN, and they had no comment on the issue.

Want to discuss the new MSN program? Join the talk in our Search Engine Watch Forums thread, New Search Ads Program Coming From MSN.


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