May 4, 2006

Microsoft's online advertising play

Microsoft announced some big news today - they're entering the advertising game. Not surprising, given that controlling the monetization infrastructure for advertising is going to be a key choke point in the online media economy. There were already mostly there with their own sales force, etc. - this just cuts out the middle men (*cough* Yahoo *cough*) and illuminates the strategy behind some other moves on their part.

As an aside, talking with some friends today, this news hilighted a funny brand halo effect: when Microsoft grossly modifies the economics of a technology sector, everyone frowns and yells "Monopoly!" (even when they're following), and yet when Google does it, folks stumble over themselves to fawn with "Disruption!"

I'm not sure I see the difference... ah, well, I guess its just good to be the king.


0 said...

it is good being the king - similar to the ie browser going with msn search as a default and google making a noise about it and shouting "monopoly"!

I wonder what it would have meant for aols advert biz if aol search went with msn instead of the Google deal?

Sree Kotay said...

Yeah, that would have been interesting, at least, to watch (AOL switching to MSN, I mean).

What I meant about monopolies is this: let's say you have a business model that has 60/70% of the user base for a very signicant computing activity.

Further, that ownership, in and of itself, generates enough cash such that you can afford to (and in fact do) destroy other businesses (and business models), by using your scale (and profits) in that one business to commoditize the operations and delivery of software in other unrelated markets (say, picture management, or desktop search, or premioum storage) - areas in which there *were* companies trying to create discreet value, but that have now been "bundled" in because of SUPPOSED accretive value to your original software entrypoint. And in fact, you use that original entrypoint to hawk said software...

What would you call that?

0 said...

a good business model :)

0 said...

ur right - a monopoly, which will lose out in the end - as the audience evolves into smart users who realise they are getting short-changed and begin the search for less familiar and better alternatives.

Sree Kotay said...

lol - yeah, true enough roopa - that IS a good business :)

At some level, its what all businesses do, especially as they succeed - extend that success into "adjacencies".

Its just the multi-standard dogma from the peanut gallery I find amusing :)