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Microsoft will be rebranding its ad-center and changing its name to 'Bing Ads' in an effort to make its search product stronger and take advantage of the momentum that it gained with the ‘Bing it On’ campaign. The changes made to the ad-center include a new web interface, improved ad controls, and tools that empower agencies to manage multiple client accounts. These changes along with Bing’s increasing market share in the US can attract more agencies and advertisers to the Bing network and could increase the platform’s revenue per search over the long term.
See our complete analysis of Microsoft here
Yahoo! Bing Network has 30% market share
According to comScore, Google is still search market leader in the US, with approximately 66% share in August 2012. However, the data stated that searches originating on Microsoft and Yahoo! sites are taking up an increasing portion of the US search market with approximately 30% market share in August. For example, unique visitors on Microsoft’s sites increased from 169 to 170 million from July to August while Google’s unique visitors decreased from 190 to 187 million.
This data provides evidence of the increasing presence that Bing has on the US search market. US advertisers can’t afford to ignore 30% of the search market over the long term and will seek to maximize the impact of their advertising dollars across all platforms. While Google’s market leading position and experience with search ads probably renders its platform superior, we think that changes made by Microsoft to its ad-center can help it catch up. If the changes are successful at helping advertisers run successful ad campaigns, they are likely to spend more money on the Yahoo! Bing network.
Yahoo! to benefit from RPS increases
Yahoo! is Microsoft’s most important search partner as searches on its sites provide nearly half of Bing’s reach, according to data from comScore. Since the ads from searches originated on Yahoo! will continue to receive approximately 88% of the all advertising according to the 10-year contract the two companies signed, an increase in RPS from advertisers on the new ‘Bing Ads’ platform will also drive an increase in RPS and will provide upside to Yahoo!’s stock.
Overall, we think that Microsoft is taking all the right steps in trying to rebrand its search engine. This could be a make or break time for the platform as it must capitalize on positive momentum gained form “Bing it On” ad campaign and its addition to the Kindle Fire. We will keep an eye on Bing’s numbers over the next six months as they will provide signs about the company’s strength in the search space.
We currently have a $41 price estimate for Microsoft, which is approximately 30% above the current market price.
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