By Colm Bracken, Microsoft.
So Dave was here last year and he talked a little bit about some of the themes that really are top of mind for advertisers at the moment as they relate to search. He gave our view very broadly on some of the things that we're thinking about that are of real importance to both consumers and advertisers. I'm probably going to take it another step down. Because Dave is great at giving, he calls himself the Chief Envisioning Officer because he wants to be CEO at Microsoft at some point. He gave himself his own title.
So really did give a good job of what our vision is for Search. I'm going to take it down a level as I said. And bring you through some more detail around about especially as it relates to Microsoft. And some people might go, the title of my presentation and go 'Is that the best you could come up with?' "Moving Forward from the Past", but I think it especially relates to where we are at the present time, and we're really investing hard on making sure that we're delivering across multiple devices and services as we all kind of get on board with the new era of Search.
So I'll just start off by saying that these two handsome chaps in 1975, set out to put a computer on every desk, in every home. And for those of you who don't know. Bill on the left, and Paul Allen on the right, and they were quite successful at that.
A few years ago and our CEO Steve Ballmer said 'What we want to do is create experiences that combine the magic of software with the power of internet services across the world of devices.' What we really need to do is move from the previous goal that we talked about which is very software focused, to a world where we accept that people are demanding that they can use devices that use software that's lit up by the power of online, and services that we can deliver on line.
Relating it back to the title of the presentation, it's a pretty strong move and it's quite significant for us. So what we're really looking at is how do we look at these new ecosystems that a lot of these technology providers are working to build.
I'm going to bring you through maybe some of the other players in the market, how they view this devices and services world. A lot of this will be familiar to you, but I think it gives us a good framework for thinking about how devices and services will work, and can work together across these technology companies.
Apple, very successful in this area, and I don't need to tell you that they do a great job of producing some some seriously attractive pieces of hardware and they couple that, and very tightly integrate that with services such as iTunes and the App Store and Siri and search into those devices. So they have a very tight ecosystem there between devices and services.
At Google, hugely successful with Android platform and the Android platform as you know can appear in lots of devices, across lots of manufacturers. It's a very successful strategy for them, and they're able to deliver then great services on to those devices.
Thirdly, Amazon, I don't know about you, but I remember when Amazon actually sold books and that was their number one business model. They moved in to retail, and now they're very much focused on delivering entertainment through devices, through their Kindle platform, their Kindle device I should say. And their acquisition of LOVEFiLM puts them in a great place to deliver great content through devices that they sell.
Finally that leaves us at the end, and people kind of go, 'Where does Microsoft fit in to this?' I think we've changed slightly over the past few years as I mentioned. What we're doing is producing some devices, we're also empowering manufacturers to light up their devices with the various platforms that we offer. Mainly Windows and so on.
So what we have is bunch of great devices such as the Surface that we launched last year, and the pro launched a few weeks ago. We have the Xbox 360 and the imminent arrival of Xbox One, which for us is a huge investment this year. In terms of delivering great content into people's living rooms, and I'll talk a little bit about how Search fits in there.
We have Skype which is a tremendously successful and well loved service I would say. Where we plan to integrate that service across devices. But also integrate it with Search, and again, I'll talk a little bit more about that. So that's just to give you kind of a view as to where we're all sitting in this space. And I suppose the question at the top of people's minds is how does search go across these two layers.
Right, so I'll do a little bit of what my colleague Dave does. I'll attempt to give my say on where I feel this digitisation of society is really important for everybody in this room and how Search fits in with that. So they way we look at it at the moment is that Search really is a gateway into an ever expanding, ever growing and ever changing type of information.
In the past, I remember the first time I ever used a search engine, it was the first day of my computer science degree. And so I selected to do that degree, and then on the first day I actually did my first search query.
I think it was on something, I think it was Lycos search, I'm not sure, and that was in 1997 and I just remember it was in the university library, and there was a few of us grouped around the PC and the sheer giddiness of being able to type a word into a search engine and for information to come back about the places that we lived, or about the capital of, I don't know, Sierra Leone. Whatever the piece of information was that we were looking for. That was mind blowing at the time. I think we've moved on a bit since then.
The fundamental is that, that information, that knowledge is still very important to the web of documents. What I'm trying say here is that we've moved to beyond the web of documents to the web of things, the web of people, the web of places. There's a few drivers and a few things that kind of go across all of these things mobile and I should probably put in mobile/devices.
The growth of mobile devices and tablet devices really, really has changed the dynamic of where Search fits into all of this in terms of how people go about searching, search behaviour, whether they're on the move or not and how information comes back into that device.
The second piece is around the application of the web. No longer will search just be a fixed domain that you would go to. A lot of people consider currently what they do for search is to fire up a browser, maybe go to a search engine, perform a search and get some results back.
I think the very nature of the fact that these devices are changing in size, in shape, and the way that they're used really does suggest that the browser, that that process I mentioned earlier around people firing up a browser, performing a search at a dot com domain, why it would still be important, won't be the entire universe. So you can see that there's a growing amount of search entry points across all these devices.
The third point we should make is around big data. That good old phrase, because world is not just about html documents anymore. And the sheer growth and the amount of data that is out there around people and places and things, really means that search has to do an even better job of finding the right information for you.
And finally, natural interaction, particularly around gesture and voice. Again going to become really, really important. You may have heard voice search early on today, I'm not sure. We currently enable voice search in our Xbox console. And we also enable that natural user interaction using hands, and that will become even more prominent as I said with the release Xbox One.
So search as we know it is about a key word linking to a web page, and because those however many number of characters is replicated on the web page it was a really, really fundamental shift back in the day, but it may not be the universe as I call it, going forward. Okay.
So this digitisation of society, search is still the gateway through all of this. Search is still going to be fundamental in that it will go across all of these different layers. Search is still the gateway, but if you were to evaluate how you use search today, would you say it's any better than what it was in the past? It is as relevant as it can be for you as an advertiser in terms as how you connect people, consumers to your product? We would argue maybe it could be better.
Some research at Microsoft some years ago suggested that as many as one in four searches do not come back with a really relevant answer. So it caused-, one in four searches means that people have to go and refine their query, or they may have to put in another query in, and sometimes go, 'Ah, that's my fault. I must not have put in the right query string.'
Imagine if any of your other possessions didn't work one in four times. One in four times your car didn't start in the morning. You'd kind of be unhappy about that. So we believe there's a lot more work to be done in this space in terms of relevance.
As we talk about this web of knowledge. I remember in 2003, I started a blog with some university friends and back then it really was a case of 'Wow, you can publish yourself.' We did have to grapple with html, it was a bit cumbersome. It's not like now where we've got all these great platforms, Tumblr to the very social networks to be able to publish information really, really easily.
But as I said, that original means of determining relevance, surfacing great content. Pushing information out into the web is still really important. That doesn't go away, I'm not in any way diminishing the value of this web of knowledge.
But the web of people really is quite a recent phenomenon. I think one of the fears I had when I first learned about social networks and stuff would be that we would all exist in this kind of second life type of environment where we'd have avatars and we'd interact with each other in these really awkward and weird ways. That's not necessarily what I mean by the web of people here.
The web of people really is about the social graphs that are growing and growing. The relationships that you have. The fact that you're represented as a person, that you have a digital personality, that you have a digital identity online, and that you interact with other people. There's inherent value in there as it relates to search.
I'll try and give you an example of that. Let's say I'm walking down the street and I'm looking for coffee. I really need my coffee fix. And I do a search, it gives me the nearest ten coffee shops nearby. So I've got one to ten whatever. So I go. 'Right, I'll go to the nearest one.' When I go to the first one and it really looks a dodgy joint. I know I'm going to get, no offence, Maxwell House, or some sort of instant coffee. It's not maybe going to be the gourmet coffee that I was hoping for.
And that's where that previous world kind of falls down. That degree of relevance, sure it's the most local coffee shop, but is it the one that best suits my needs at that point in time? What if you could bring that information from the social graph, tie it together with search to bring a much more trusted response. Not just a relevant response, but a trusted response.
We have a partnership with Facebook in the U.S., where we do just that, and we're still working on the best implementation there. So if I'm looking for a particularly nice place to stay when I go on holidays. I can, in the search experience, get the results back that says my friends have stayed there, maybe they liked it, maybe they didn't like it.
That's really, really powerful, Okay. And equally, if my friends give me a music recommendations, music recommendations is the scenario here. I've lots of friends who really have dodgy taste in music, and I simply won't take on board their suggestions.
So there's lots of different ways how this could play out, and there's real value. The important point to make is that there's real value
in here. The next point I would make around is the web of places. Currently a 'contact us' page has some sort of rudimentary way of getting across a post code or a location is how we treat addresses on the web.
Obviously on a map you can find most places in terms of their address. But in terms of that richer content, really there's very little. I came out of a train station here, and I've never been to this building before, and I walked completely the wrong way around because I couldn't find out online where the right exit was.
I took the wrong exit basically. But the information about the train station as it related to this area, I simply couldn't have pre-empted the wrong decision that I made, and I ended up walking around the block for about five, ten minutes in the rain.
So the point, I guess, here is that there's so much information about places that haven't been represented in a really good way yet. And search again would be a really important thread in terms of how we get that to people's phones and devices.
So we take all of that together and really what we're talking about is a web of the world. It's kind of a subtle, but a really transformative thing, because it's kind of happening bit by bit over time. Sometimes it's hard to take a step back and to see the progress being made over the past few years, and the changes that are happening and put them into context of how you work, and how you live.
That is the framework for which we view the world, and how we plan to grow the search experience. And I talked a little bit earlier about search devices and services and I'll talk a little bit more detail now about how Bing and how we plan for Bing to be kind of a golden thread across these services and devices.
We have a few different services that you may be familiar here with here. Office 365, our subscription platform for our Office suite of tools. Xbox live, Skype, Yammer. Yammer's a cool one that I've been using at work quite recently. Yammer is a social networking within enterprise. Really, really cool stuff going on in that space.
Skype, as I mentioned earlier, I suppose one example there on Skype is how we're integrating search and Skype. We're working on a product, a click to call product effectively where we will in our search results in our ads we will give users the opportunity to place calls with those advertisers.
Through a free of charge Skype client or through a Skype scenario I should say. And we'll be able to work through a really good model for advertisers there. So we don't lose that customer, advertiser, don't lose that customer. And effectively we can maintain that journey for the customer.
The next piece is around on devices, what are these devices I'm talking about. Windows Phone 8, I don't know if any of you have seen them.
We have a strong catalogue of phones across numerous manufacturers, especially with Nokia.
Nokia have great pedigree in terms of building phones, and our partnership there really is bearing fruit in the U.K. where we've grown share consistently last year, and to I think about 6% or 7% from very little last year.
Very, very different platform that maybe for those of you who haven't seen it, that maybe the iPhone, or the IOS platform or Android. We talked a little bit about Xbox. Currently if you have an Xbox you can search Bing. You can use voice search to connect with Bing as a service to search for great content.
That's a really, really useful service, and if you're like me, you walk around the living room and you're talking to piece of machinery. It can look a little strange. I think once we all kind of progress down the line around interacting with devices in a different way. It'll become a lot more commonplace and a lot easier to do.
We still have great partnerships with Amazon around the Kindle, and with the default search engine there, and on the Surface device. The Surface device is a product that we launched last year. The RT, the first version of that product. The second version is what we're calling Pro, and Search is very much built into that operating system.
You may have seen these recently about when we go to refresh the operating system in Windows 8, to Windows 8.1, Bing will play a really prominent part of that operating system. Some more details to come there.
I don't think this slide will be of any surprise to you. I'm very guilty of the whole using my phone as an alarm clock. I don't know, does anybody else uses their phone as an alarm clock? Yes. Nobody buys alarm
clocks anymore, and you know what, the few times I have been without my alarm clock I certainly go, how the hell am I going to wake up in the morning.
So I've actually bought this really... Remember those alarm clocks with the red sort of solid lines, they really brighten the room. And so I bought one of those just in case I lose my phone or as in the case last week, someone poured beer over my phone.
But I am guilty of turning off the alarm and immediately, that's terrible, and for shame, and all of you should be ashamed of checking your email first thing in the morning or, checking the news site, BBC news, or Guardian, whatever your preferred news site is. Or social networks, whatever it is.
This, for me, is-, this says to me people will change their behaviour despite what they tell you now. I made a point earlier about talking to a device. People go, 'I'd never do that, that's ridiculous. It'll never get to a point where I would actually speak to a device.' Whereas a few years ago people would say, I would never have a device, a mobile device or a laptop, or whatever it is in my bedroom because that's an invasion of, at the time I just want to spend downtime and so on.
So that shouldn't become, shouldn't be a surprise for you. Nor the fact that PCs dominate working hours. Nor the fact that tablets are really popular at night time. So I just wanted to kind of throw that in there as a reference to some of the points I made earlier.
And I'm going to speed up slightly because I'm going a bit longer than I had planned. I'll rattle through these. These are some of Hero, we call them Hero devices that we have, and that where Bing will be a core part of, as I mentioned Windows 8, and same with mobile, a lot of cool handsets coming from Nokia at the moment.
In terms of the breakdown of our audience and of the traffic that we see through the Yahoo!-Bing network, I'll talk about that in a bit. We don't have as much share as Android or iPhone, that's a given, so we actually have more PC volume as a proportion of our overall traffic then maybe Google do. And that has its own consequences for you as an advertiser.
And finally I'll talk a little bit five or ten minutes about our partnership with Yahoo! For those of you who don't know we formed a partnership with Yahoo! about a year ago. Just over a year ago, where we joined forces and Microsoft provides the technology and powers Yahoo! Today and it powers the search advertising platform.
And Yahoo! then manage our premium set of customers and Microsoft took on the responsibility for servicing S&B customers. Or customers who sign up with a credit card.
The other terms of the partnership sense then we've managed to grow clicks by 30%. Our click through rate has increased 35% and CPC has reduced 8%. So if there's any fear out there that we were just simply going to jack up the price of search advertising for customers it was unfounded. We've really spent time in making sure that the relevance of our platform is good for advertisers.
And I don't want you to think I'm just standing up here selling you a pack of lies. What we did was we asked Adobe who very kindly went through their data for us, and came out with three key facts. The first was that CPC's are 25% lower than Google's. Our click-through rate is up, and our click volume is up. And our ROI is maintained at a really good rate versus the competition.
So we're really pleased about what we've done for customers here, and what we've done for ourselves, and we've really tried to make sure that the value in that partnership has come through for customers. But also in terms of the fact that our customers only use one platform now.
So we're committed to delivering an engaged audience. I'll show you some stats here on the size of our main audience and this is according to comScore. In the U.K. we have around 20 million people in the U.K. Who've either used Bing or Yahoo! and this is again as I said from comScore, and amazingly 4 million, we have 4 million unique searchers who don't use Google.
Some of those numbers maybe a surprise to you, but this again is Com score data and we're quite confident on this data. So there's a real opportunity there around the sheer scale of the audience that we have to offer advertisers.
In terms of demographics some people ask us, 'Tell us about your audience.' We break down the demographic into age. You can see that on the left, the X axis, the left is the index, and the right hand side is percentage composition of our audience.
So we actually index really well in the 25 to 34 year olds, and the 35 to 44 year olds. And what that translates is the fact that our audience had good amount of disposable income.
Which then should hopefully come through on the ROI that you're getting from your search advertising with us. So we've got a good audience with a disposable income who are delivering really good ROI for customers.
And finally I'll bring you through our stance on devices and advertising. We're very committed at Microsoft to make sure that you have the option to advertise on devices on any which way you want.
Because we recognise that devices behave very differently to each other. The behaviour on these devices is very different and across verticals. So our stance is that if you want to advertise on one particular platform that's fine, you can do that. If you want to do aggregated across all devices you can do so. So want to maintain that control for advertisers and that's our position and in terms of how you go about creating search campaigns across devices.
This is the final slide. So this year I've talked to you a little bit about our vision, how that's broken down, across devices and surfaces. You'll see more as I said from our announcement with Windows 8.1. The preview I believe is available later in this month.
So you'll see some pretty cool stuff there. As I said, Bing will become a very important part of our Windows operating system. So that will hopefully help us to continue to drive that volume that I know you're all asking for.
It's really, really important that we give advertisers a choice in the market place in terms of where they can spend their hard cash and we're really determined to make sure you guys get that volume that gives you that choice, and we will continue to innovate on some of the add products, especially in mobile and local.
Again I think it will be a real priority for everybody in the room next year, and we intend to get some pretty cool products there. I mentioned the Skype integration, global readiness and increasing horse power Microsoft phrases that I won't even go into. That is me done I said I would be probably a little bit early. All the best and thank you very much.