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Online Advertising… The Shift is here.

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With Google’s USD$3.1 billion buyout of online advertisement company DoubleClick and Microsoft’s recent USD$6 billion acquisition of digital
marketing company aQuantive, the world of online advertising is dramatically
shifting into high gear.

Both companies are moving rapidly into each others’ turf. Google, being a leader in the online search engine and advertising industry has in recent years, develop and acquire applications to bundle with its services (Google Maps, Picasa…) Microsoft, on the other hand has been a leader in building the entire computer industry around its Windows ecosystem and in recent years, moved a great amount of resources and acquisition to the online search and advertising market dominated by Google and Yahoo. Prior to aQuantive, Microsoft bought a company called Massive Inc for its expertise to insert advertisement into video games. Disruptive forces is happening in the software industry – where a shift away from desktop applications and toward applications / services delivered over the internet.

Ray Ozzie, Chief Software Architect of Microsoft has made it clear the importance of Microsoft focus on ‘Software Plus Service’ paradigm in the recent press conference held. And more recently, they announced that Microsoft Works, a trimmed down version of their office application suite will be provided for free, with ads supported.

From a personal point of view, Microsoft has not been the most innovative company in recent years to be the first to come out with applications / services but if you look at their history of acquisition and focus, you have to be very afraid when they do expand into a different industry all together. Microsoft has the tenacity and flexibility to adjust and align itself to new markets dominated by others and through play safe approach (letting others test and try out the market), and seeing the potential growth of the new market, Microsoft with its billions in cash reserves will make the second / third move. (remember Netscape in the 90s)

Google’s dominance has come primarily from its prowess at making money from ads placed next to Web search results. Google snagged nearly half of all Web searches performed in the United States in June while Yahoo grabbed about 25 percent and 13 percent were on Microsoft’s search sites, according to audience-measurement company comScore.

Some analysts see the search-ads market starting to stagnate and believe Microsoft’s bid for aQuantive, indicates a looming shift in online advertising.

The early online search-ads have really propelled Google’s growth for the past four years and is starting to slow down… according to Gartner Inc. The next wave of growth is going to be big brands shifting their advertising budgets, still largely invested in newspapers and TV, into the Internet.

The shift is here…

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Written by gooddealz

September 13, 2007 at 5:05 am

Posted in Watch Out

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