Thursday, June 11, 2009

Will Bing Yield More Bang for Ad Bucks?

Today released data showing that seemed to reaffirm the two point increase in search share for Bing that comScore reported on Tuesday and I discussed in my last post. However, interestingly, Compete saw little change in share for Google and Yahoo so it's likely that Bing stole share from Ask or other smaller engines.

Perhaps, even more notable was the drop in avg. queries per user reported for Bing vs. Live Search. Prior to Bing's launch, MSFT searchers performed an avg. of 5.2 queries per person. Post-launch, that number is 3.9 -- a drop of 25%!

So, while Bing may indeed be helping searchers find what they're looking for better, they're displaying fewer results pages which means fewer ads, fewer clicks, and fewer dollars. For this equation to work in the long run, Bing needs to hope that its increased relevancy will bring more searchers to offset the fewer searches per searcher. Got that?

Look at it this way -- with a 25% decrease in queries per searcher, Bing will need to get 25% more searchers just to get back to even in terms of ad revenue. A two point lift in share translates roughly to 20% more searchers so Bing is close but will have to scratch another point or two.

Now, of course, it's not that cut and dry. With more relevant results comes more user- engagement. With more user-engagement comes higher click-rates on ads. And with higher click-rates comes higher effective yield per page in terms of ad revenue. So, Bing may be running break-even right now in terms of more searchers but fewer searches per searcher.

In theory, more relevancy should also drive higher conversion rates as people have less searching getting in the way of their purchasing. Higher conversion rates means advertisers will be willing to pay more per click, thus, boosting Bing ad revenue.

Now, all of this is speculation and it's way to early to tell what impact Bing will have on consumer search habits and advertiser performance (ya heard me, analysts and investors?!?) but one thing's certain -- Bing is coming out of the gates with a Bang.

Bing Bang

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