Bing Search Struggles to Lead Microsoft Online Services to Success

NEWS ANALYSIS: Despite the huge amount of cash and technical innovation that went into building the Bing Search Engine, Microsoft is still looking for a market breakthrough that will allow it to turn its Online Services Division into a money-maker that can seriously challenge Google.

Vanity Fair magazine has been teasing the reading public by posting excerpts of its upcoming online report about Microsoft. It touts the missteps made during €œMicrosoft€™s Lost Decade€ with Steve Ballmer leading the company as CEO, but says little about its technology successes during that period, including Bing.

The $6.2 billion write down Microsoft announced for its Online Services Division earlier this week underscores the trouble the company is having as it tries to make headway against Google€™s lead in Internet search and online advertising. However, Bing itself remains a promising and credible product.

The failed acquisition of digital marketing company aQuantive in 2007, which was designed to counter Google€™s acquisition of DoubleClick the same year, is the reason for the $6.2 billion write down. But Bing is not yet a financial success for Microsoft either because it hasn€™t provided the huge surge in search volume that Microsoft might have hoped for when it introduced the search engine in May 2009.

Try as it might, Bing can€™t seem to chip away at Google€™s search market share lead. Quarter-by-quarter Bing may gain a little while Google loses a little, but Bing€™s market share remains stuck in the mid-teens percentagewise while Google remains safely in the mid-60s range.

Still, Bing works as a search engine. And despite snarky headlines like €œDo You Use Bing? Yeah, Me Neither€ from Forbes, for example, Bing is a competitive product and Microsoft has continued to improve the search platform.

It recently revamped its results page to include recommendations from Yelp when people are searching for a restaurant, resort, hotel or other business. Although this followed a similar move a few weeks earlier by Google to add Zagat reviews to its search results, the tie-in with the popular Yelp site and its 71 million unique monthly visitors is a coup nonetheless.

More importantly than the Yelp deal is Bing€™s redesign, unveiled in May, which incorporates Bing search results on the left side of the screen with results related to the searcher€™s Facebook friends on the far right. Search €œ2012 Ford Focus€ and the results could include links to dealer sites or car reviews, but also comments from Facebook friends who bought that car.

Bing also adds a middle column it calls €œSnapshot.€ If the user moves their cursor over one of the links on the left, some information about that link appears in the middle column with more details about that car, restaurant, hotel or whatever else is being searched.

And while it€™s only cosmetic, Bing€™s home page features fascinating high-definition photos from all over the world. It€™s a nice little surprise each time you go there.

These are all pretty innovative features, although Google has, of course, also been improving its search all along. But Microsoft€™s challenge isn€™t whether Bing is any good but whether anybody knows that it is. Despite spending a reported $80 million to $100 million on the marketing of Bing in the first year after its 2009 launch, Microsoft had a marketing problem with Bing as well as a strategic problem€”the aQuantive deal and its overhead.

The Website SeekingAlpha says the losses at Microsoft€™s Online Services Business unit, of which Bing is a part, are €œowing to challenges associated with deteriorating advertising monetization, escalating online traffic acquisition costs and falling revenue per clicks.€

I covered a Microsoft event in San Francisco in 2010 to mark the first anniversary of Bing. Members of the Bing team showed off all the projects they were working on to improve functionality.

I asked the Bing team what evidence they had that €œBing€ had become a verb like Google has, such as €œI binged Lady Gaga and she€™s performing next week at Madison Square Garden.€ That would be a breakthrough in that Bing would become not just a product that Microsoft sells, a part of the popular culture. Unfortunately, their only evidence was anecdotal: €œI heard it in a Pepsi commercial,€ one of them offered.

Bing as a verb did make a guest appearance in the first season the new TV series €œHawaii Five-O.€ In one episode, one member of the Five-O team recognized a piece of art that came up in an investigation as being by a particular artist, much to the surprise of one of his partners. "Don't believe me? Bing it!" he said.

How do I know this? I found it on Bing.