Google watch out, MSN is coming...

There may only be room for one winner in the battle of the titans which will soon break out in the search market. MSN and Google, antler to antler, have been eyeing each other up for the last year - each trying to exploit their own strengths and and overcome their weaknesses as they face a competition in which the stakes are all too high.

The stakes of the game involve money - more money than most of us can imagine - but that's only the half of it - reputation and the number one spot are the true goals.

Around a year ago, MSN's attack on the search market became inevitable with the launch of its own search index and crawler tools. Then a few months ago they began testing their new paid search advertising tool "AdCenter" with its launch in English in Singapore and later in French for the French market. The idea was to iron out the bugs and prepare to do battle in the key markets of the US and the UK.

If you were a venture capitalist, you might be prepared to launch and run a search engine these days just to claim some share of the rising market - and make some money. European search engine, Seekport, is doing just that. But this is Microsoft and Bill Gates we're talking about. From monolith of the PC world, to also ran in search, Microsoft is seething with anger at not being taken seriously enough in the search market.

A large marketing spend to promote MSN search moved its market share by a barely measureable percentage. It improved and invested further in its search technology - but still everyone turned to Google from choice. The team at MSN are visibly frustrated by their lack of progress at uprooting Google and the apparently blind loyalty of Google users. Representatives of the company could barely mask their frustration at the recent webmasterworld conference in Las Vegas. Quite clearly, they feel that users and search marketers have not given MSN the credit it deserves for progress.

Of course there is a third competitor in the market - Yahoo - which benefits from every paid-for click which takes place at MSN because they own Overture, the paid-search vehicle which runs the sponsored links in MSN and Yahoo. All changes once MSN rolls out its own advertising tool AdCenter - live now in the US and soon to arrive in the UK. It makes a whole world of difference to your promotional investment plan if you stand to reap the lion's share of the resulting advertising revenue - rather than handing a home goal to another competitor.

Does MSN stand a chance? How are they going to knock Google off it's pedestal?

I met with some of the team from MSN search at the Search Engine Strategies conference in Chicago last week and was given a grand tour of the AdCenter advertising tool. As my American friends would say, it's "awesome".

MSN aims to leverage its strength in the personal data it holds from millions of Hotmail or Messenger users to enable more sophisticated targeted and use of demographics. In auctoin-style search, this becomes somewhat complex as the bidder must choose different levels of bid for different demographics, gender, and age. The system also provides what's known as a "dayparting" option whereby you can choose between your ads appearing within 6 four hour slots during the day.

But it is clearly a strong proposition and will give it advantages within certain market sectors. Take fashion for instance, you really do need to know whether your sponsored links are being shown to men or women if you are, ahem, marketing lingerie!

Google is aware of the threat and its own weakness in terms of the knowledge it has of its users - hence the birth of Google Mail, personalised home pages and Google talk - all gathering demographic data on users as fast as Google's hard drives will take it. But Google has a couple of aces up its sleeve.

Right now Google has the audience and some 60-70% of it depending on whose figures you take. MSN's core weakness is it has no audience. It's a catch 22 for MSN, it needs the audience to win the advertisers to drive its system forwards. Meanwhile, Google clearly perceives the threat as it recently briefed and launched a European media campaign.

So what happens next?

My view is batten down the hatches - what we've seen so far are but a few mild skirmishes and it's going to get bloody. MSN is out to buy audience and to do it quickly - and my new year's prediction is that those deep pockets of Microsoft and Mr Gates and going to be raided more deeply than usual. Equally, Microsoft has learned that it needs to work with partners and with every channel it can lay its hands on - something they have learned to be good at from a poor start in the software world.

There will be deals galore - ones which we today don't even imagine such as arrangements between MSN and AOL (talks apparently are going on). Big sites with search potential (such as the BBC?) are going to get cracking deals on their search facilities; engines we've heard of and many we've not will be swallowed up - anywhere there's an audience they'll have it. And there'll be some big name acquisitions too.

The good news for advertisers and search marketers is that we're going to be wooed and encouraged to work with MSN. For Google, which in an unfortunately timed move, recently managed to upset large slices of the advertising community, this is not mere swanking and sword waving.

This is war.