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MSN Drinking Cool-Aid?

MSN Delusional?



10:31 pm on May 26, 2006 (gmt 0)

MSN Selling Cool-Aid?
It's no secret that Bill Gates, Steve Ballmer and the entire MSN team are
in full panic after losing a year-long strategic effort with AOL to
recover their chances of being a player in the search business. We all
know that Google triumphed.... and now that Yahoo! has also rebuffed them...

This isn't the first time MSN has lost.
After MSN had the chance to purchase Overture in 2003 for a song they
mis-read the value of the paid search business and fumbled it to Yahoo,
who has not only recovered the purchase price (1.7BB) but has parlayed
what has become a 2BB/year golden egg of revenue into launching newer and
better services than MSN could dream of even 5 years from now.

Now we hear that MSN offered a boatload of cash for Yahoo! and was rebuffed.

What's interesting is that MSN cannot make decisions at a rate that is
even close to competitive when it comes to product, acquisitions and
innovation. While Google is the king in these areas and Yahoo is a close
second, MSN isn't even on the radar. Take for example their launch in
2004 of a new user interface. It was modeled after Google in 2003, but
took one year to get put into production, by which time they looked like
Google did a year prior. Meanwhile, Google (and Yahoo!) had long since
moved onward and upward.

Today MSN touts their "AdCenter" product [to compete with Google and
Yahoo Paid search some day in 2006], which is performing at less than 50%
of the revenue per search of even the ASK.com product, let alone Google
and Yahoo! Their executives don't understand the paid search business and
middle management is so couched in soft-landings and endlessly deep
pockets for spending that all the urgency needed to compete is gone. It's
been replaced by what one MSN insiders calls "an endless stream of
analysis and meetings and committee decisioning...it's like working for
the I.R.S. at MSN...bloated bureaucratic processes driven by fear that is
derived from abject ignorance.".

MSN is also purported to have a dismal understanding of their performance
metrics related to their matching technology. While they have spent
millions and more than two years trying to improve things, their products
remain in the hands of managers who "ponder and surmise" what the data is
telling them "like a soothsayer on downers...taking months to make simple
business decisions even when it is clearly a win-win-win situation for
MSN, the users and revenue", said a different but equally exasperated MSN

While middle management lazily paddles in the dark, swatting mosquitos
while crocs eat their lunches on the shore, some at MSN are beginning to
jump ship, or in this case, jump canoe. Their ad sales teams are in
disarray as no one wants to be on the wrong side of a lost cause.
Advertisers expect far more than MSN is prepared to deliver and
blustering at the poker table of high-stakes paid search has put MSN in
an awkward position. They are used to being late and missing deadlines,
but they are not used to the new transparency of their failures that is
fundamental to the search business. This is no missed ship date for
Office. It's much worse: missing billions by years while their 2005
market share in search slips, despite 120MM in promotional advertising.

One of Microsoft's reactions to MSN's failings has been something called
"Live". It's too silly to spend much time on here, but basically it boils
down to this: you get discounted or free versions of PowerPoint as long
as you agree to see paid search listings in your presentations. OK,
that's a bit of hyperbole, but not too far off the mark. Good grief
Charlie Brown!

An Amazing amount of Cool stuff.
But the really scary thing (REALLY scary) is that MSN staff are
continually being told by management that their search and paid search
products, processes and innovation capabilities are world class, even
"second to none" one attendee of an internal meeting told us. "They are
constantly conducting internal 'ra-ra' sessions where 2nd and 3rd class
recycled and tired ideas are presented as the most incredible thing the
world of search has ever seen...people clap and cheer at ideas that are
old, outdated and inneffective" said the same attendee, "I've seen nerds
running down the hall with party hats on, squeeling in delight that MSN
launched a re-ordering of the left side link menu so it would look more
like Yahoo!...It's really frightening how much coolaid is being drunk at
MSN these days". In addition, a third source said that personalities, not
good ideas, are rewarded and promoted within. "Some guy writes a macro or
makes a pivot table in Excel to slice a bit of data and within a week,
he's telling upper management what to do and how to do it".

MSN is well on it's way to battling it out with Diller's Ask or the
itsy-bitsy FindWhat engine for a distant 3rd place slot behind Google and
Yahoo! The new business term for a 3rd place dogfight is "in the ditch".

Chalk it up to a wildly ignorant executive management team that rewards
slow innovation, extreme caution in the face of clear winning decisions
and deep pockets that allow for long middle-management meditations while
the world of paid search screams past them.

We think the game may be over for MSN, but the Coolaid's still tasty if
you want some!


11:07 pm on May 26, 2006 (gmt 0)

10+ Year Member

Fascinating article. Thats pretty much what I though was happening. Too many meetings, not enough action. Denial ain't just a river in Egypt.


11:25 pm on May 26, 2006 (gmt 0)

10+ Year Member

Today MSN touts their "AdCenter" product [to compete with Google and
Yahoo Paid search some day in 2006], which is performing at less than 50%
of the revenue per search of even the ASK.com product, let alone Google
and Yahoo!

Maybe they need to be a little looser with click fraud. ;)

Seriously, I doubt MSN is a bunch of clucks running around, although I'm sure a few of their competitors would like you to believe that.


12:21 am on May 27, 2006 (gmt 0)

If they had any clue what they're doing - they wouldn't have released the AdCenter in the current form.

I'd believe they are every bit as disfunctional as the article portrays them.


7:48 pm on May 27, 2006 (gmt 0)

10+ Year Member

Strange - our ROI on MSN blows away Yahoo, Google and especially Ask.


9:36 pm on May 27, 2006 (gmt 0)

10+ Year Member

Strange - our ROI on MSN blows away Yahoo, Google and especially Ask.

yah, they handle invalid clicks much better than the others, probably has to do with revenue independence.


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