“Bing It On” Results Could Pay Dividends For Microsoft

by Trefis Team
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Ever since Bing’s release, Microsoft (NASDAQ: MSFT) has been unable to make the product profitable. In its latest fiscal year filing, the company reported an operating loss of approximately $1.9 billion (excluding writedowns) for its Online Services Division, continuing a long standing losing streak. Microsoft’s efforts to turn the segment around have largely been futile, but recent developments from its “Bing it On” campaign could improve public opinion of the product and can contribute to a turnaround of this struggling division.See our complete analysis of Microsoft here

“Bing it On”

One of the primary reasons that Bing has had lower market share than Google is because of the prevalent view that Bing produces inferior search results. While this might have been true when Bing was launched, the company’s internal tests showed that it had surpassed Google in search quality.

Quantifying their findings via an independent avenue was the primary motivation in putting on a recent user preference test dubbed “Bing it On”. Microsoft commissioned an independent study which, geared towards US users, was intended to measure their preference of search results between Bing and Google. Below is an excerpt from the study’s instructions:

Conduct five search queries of your choice and compare unbranded Web search results from Bing and Google side by side. For each search result, you choose a winner or declare it a ‘draw.’ You then get to see which search engine ‘came out on top’.

According to Microsoft, the study showed that people preferred Bing search results over Google by a ratio of 2:1, proving their point that Bing surpassed Google in search quality. The company will use the positive momentum gained by these independent tests to launch a marketing campaign targeted at changing prevalent user opinions about Bing search quality.

We think this marketing campaign, if successful, could help Microsoft increase Bing market share. While the segment is not a material part of Microsoft’s value currently, an increase in Bing’s popularity could entice advertiser to shell out more advertising dollars to target a growing audience. This would consequently increase Bing’s revenue per search and provide the company with a substantial foothold in the online search market.

We currently have a $41 price estimate for Microsoft, which is approximately 35% over the current market price.

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