Microsoft released the MSN Toolbar (here) this morning, which weeks earlier tech enthusiast sites had reported to be in beta. At first glance, the browser ad-on on is a direct response to the Google Toolbar (here). After all, search is an increasingly focal area of Microsoft portal, operating system and application development. Paid search contributes a significant chunk of MSN revenue.
But the toolbar also brings something else from Microsoft to Internet Explorer users: Pop-up ad blocking--and well ahead of a similar feature slated for release with Windows XP Service Pack 2. I tested the ad blocker--a feature Microsoft is extremely late to bring to market--and found it to be effective and easy-to-use.
I’ll break my analysis into two sections: Search and pop-up ad blocking.
Search:Many of MSN Toolbar’s features are similar to those from Google, including Web or site search, search highlight and pop-up blocking. Like Google, MSN serves up many search sub-categories, such as news. MSN’s sub-category searches, such as money, encyclopedia or people, all lead to portions of the MSN portal. Google takes a more traditional, Internet approach of searching groups or directories. Additionally, Google offers image and restricted-to-country search. Google’s news search draws headlines from many different sites; MSN’s news search largely pulls from MSNBC.
Nice touch: "BlogThis!" feature for posting to Google’s Blogger service.
That MSN released its own toolbar is no surprise. On Thursday, Microsoft reported Fiscal 2004 second quarter earnings. MSN pulled in $546 million--$292 million in advertising, of which paid search made up a sizeable chunk. With paid search pulling in so much MSN revenue, Microsoft has good reason to protect its turf from Google. Remember that Internet Explorer, which default search engine is MSN, is the dominant browser used by consumers and businesses. At the same time, many Microsoft software applications also drive traffic to MSN. My July 2003 report, "MSN Search: Microsoft Guns for Google, the Desktop and the Enterprise," explains why such bundling isn’t an effective long-term strategy.
Pop-up blocker:Perhaps the most important reason for the MSN Toolbar is blocking pop-up ads. According to my report, "Service Pack 2: Microsoft Fortifies Windows XP," 40 percent of consumers say they find traditional pop-up ads to be the most annoying forms of on online advertising. According to colleague David Card's report, "Consumer E-mail: Assessing Feature Demand," consumer disdain is greater when factoring other types of online advertising related to traditional pop-ups.
Considering Google’s popularity and IE’s inability to block pop-ups, Google Toolbar presented consumers a handy ad-in that fixed a problem and presented them easy access to the company’s search service. Access that potentially took paid searches away from MSN. MSN really couldn't wait a couple more quarters for Windows XP Service Pack 2 to bring pop-up blocking to IE. With MSN’ profitability so close to the edge, every penny of paid search counts.
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