Microsoft admits it is lagging in fight for online advertising market share
Tuesday 20 May 2008
The head of Microsoft's internet business has admitted that the company is "not where we want to be" in its battle to win market share in online advertising.
An internal memo from Kevin Johnson to Microsoft staff surfaced yesterday, after the company revived its pursuit of a deal with rival Yahoo and before an important gathering of its advertising clients, designed to showcase the progress of its internet business.
The two-day event, advance08, starts today and features speakers including the film director James Cameron and Viacom's chief executive, Philippe Dauman, discussing the advertising industry. Bill Gates, Micro-soft founder, will be among the company executives trying to illustrate how Micro-soft can offer advertisers co-ordinated access to internet search users, visitors to its MSN websites and users of its Xbox games console and other products.
But analysts said they expected Microsoft to add little to its offering at the event, which will be overshadowed by the off-and-on talks with Yahoo and by the perception that Microsoft has fallen far behind rival Google in capturing a share of the fast-growing online advertising market. Google has almost 60 per cent of the search-based advertising market, and Microsoft has less than 10 per cent, according to comScore data.
Mr Johnson wrote: "Regardless of the outcome of any new discussions [with Yahoo], it is important we continue to move forward to strengthen our online services business. The fact is that we are not where we want to be in this business yet and we've been in this position longer than we'd all like."
Steve Ballmer, Microsoft's chief executive, had hoped to combine MSN and Yahoo to improve the cost-effectiveness of its search-based advertising business, but Yahoo rejected a $46bn takeover offer. On Sunday, Microsoft proposed an alternative business alliance, understood to involve buying Yahoo's search ad business and taking a stake in the remainder of the company. Microsoft said it may reconsider a full bid in due course. Dissident Yahoo shareholders, led by Carl Icahn, are trying to force out the Yahoo board and replace it with directors more willing to talk to Microsoft.
Sarah Friar, analyst at Goldman Sachs, told clients that Microsoft still needs Yahoo to "kick-start" its online business.
- 2 Top Gear: Jodie Kidd, Philip Glenister and Guy Martin 'in advanced talks' to join show
- 3 General Election 2015: 14-year-old boy asks Nick Clegg – 'can you kill Katie Hopkins?'
- 4 University student in court for allegedly covering housemates' food in window cleaner and spit
Italian police 'reveal' what Jesus looked like as a young boy
Mysterious 'X-Files' sounds heard miles above the Earth
University student in court for allegedly covering housemates' food in window cleaner and spit
Garland shooting: Isis claims attack on Prophet Mohamed cartoon contest in Texas as its first action on US soil
Met Gala 2015: Beyoncé manages to out-skimp Rihanna, Miley and Kim Kardashian combined with near-naked ensemble
In defence of liberal democracy
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
Andy McSmith's Sketch: Feisty audience is the real star of an enlightening show
iJobs Money & Business
£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...
£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...
£215 per day: Ashdown Group: Junior Project Manager (website, web application ...
£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...