Microsoft’s Bing Problem: Google Is Just Fine
JP Morgan has good news for Microsoft: Its massive ad campaign for Bing is working just fine.
The bad news for Microsoft: For most people, Google is already working just fine.
Details from JP Morgan’s (JPM) Imran Khan, who commissioned a survey of search users a month after Bing’s launch: 59.1 percent of respondents have heard of Microsoft’s (MSFT) new search engine and 24.9 percent of them have tried it. And people who tried it, liked it, just like Mikey (if that doesn’t mean anything to you, see video below, from ye olden days).
But Khan says these are samplers, not switchers: Only four in 10 Bing users turned to the search engine more than five times in the last month.
The problem here is that for most people, there’s no problem with Google (GOOG), and no reason to make a permanent switch.
We think the biggest impediment to Bing’s attempt to gain market share is that the majority of people are perfectly happy with their current search experience. 62.6% of participants claimed that there were no factors that they would improve on their current search experience. As such, we think it will be more difficult for Microsoft to disrupt current user habits.
At best, Khan figures, Bing may help Microsoft claw its way to a two percent search share gain, but that would likely come at the expense of IAC’s (IACI) Ask and Time Warner’s (TWX) AOL.
The only way for Redmond to really move the needle would be even more expensive than the $100 million marketing outlay it has already committed: Building up its content business (that’d be you, Scott Moore), or ponying up for another distribution deal–which my employers at News Corp. (NWS) hope means them.
In order to gain meaningful market share, we believe Microsoft has to 1) create a markedly better product, 2) significantly expand its distribution (it will cost them higher TAC), or 3) invest heavily in content development to build out O&O properties. We believe that time spent on MSN O&O properties could lead to better search market share. While we expect competition in the search market to increase, we think it will be difficult to shift search behavior if people are completely satisfied with their current search engine. Of the above approaches, we think it is most likely that Microsoft will search for distribution deals to support this product launch.