Microsoft to spend up to $100M advertising Kumo, its new search engine

Microsoft will reportedly spend $80 million to $100 million on a new advertising campaign to help hawk the new incarnation of Live Search known as Kumo, reports AdvertisingAge. This despite evidence that suggests advertising doesn't help search engines grow market share. Meanwhile Microsoft continues to overlook its most obvious method of creating winning search services -- catering to its enterprise customer.

Kumo was leaked to the blogosphere about a month ago, and although it may be a mighty fine search engine, Microsoft's pursuit of this area to best Google is like Captain Ahab and Moby Dick, says blogger Google Subnet. While the business strategy of wanting a profitable advertising business makes sense, the execution isn't panning out.

Microsoft can't help itself when it comes to search advertising. As more business productivity applications (word processors, spreadsheets, photos, e-mail, file sharing) become freeware in the cloud the obvious way to make a buck off of them is by selling advertising against cloud services (like Google.) But Microsoft could do just as well by dropping its online pursuits and investing those huge sums of money with a partner who would bring advertising to its cloud services in an equitable profit sharing model. (Yahoo, Ask -- even Google could be partners. Imagine the sway Microsoft would have over Google if it became Google's largest customer?)

But partnership isn't the Microsoft's way, it seems. Kumo may be a dandy search engine but the world doesn't need another search engine, unless that search engine does something that users want. (Remember Tafiti? Microsoft launched this Silverlight search engine in 2007 as a proving point for Silverlight and it is still in beta. It offers users a unique way to work with search results, but hasn't helped Microsoft master the search market).

From the information that has been leaked, Kumo, based on technology from Microsoft's Powerset acquisition, will improve the interface over today's Live Search, but will that be enough to grab users? Probably not. Microsoft has some interesting cloud services (Windows Live Mesh), but most of its services are are me-too apps. Office Live is the shining exception. It allows Office users to store and share files from inside their favorite office applications (however, you can't access its other file-sharing services, like SkyDrive or Live Mesh from OfficeLive, ugh!).

If Microsoft were to forget about trying to woo consumers to use its search engine and instead focus exclusively on bringing to the cloud what it has and excels at -- Office apps -- it could lead enterprise customers into the cloud (provided prices were low and quality, security and support were high). Microsoft would then have massive numbers of users in its cloud and a profitable search business would ensue.

That could be too much to hope for. Instead, we'll see Microsoft spend a chunk of cash on cute commercials with iffy results. According to AdvertisingAge:

"Microsoft's search engine has languished in third place and has seen its share of the category drop in the past year. Its declined almost 15% from February 2008 to February 2009, when it captured 8.2% of all consumer searches. During the same period, Google grew its share 7% to 63.3%, and Yahoo was up 5% to 20.6% share, according to ComScore. ... Heavy marketing hasn't exactly been a winning formula for other search engines. IAC-owned, for example, asked Crispin for a major ad campaign that launched in May 2007 and focused on's algorithm. But's share declined two-tenths of a percentage point to 4.5% from July 2007 to July 2008, according to ComScore."

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