The number of clicks on ads served by Microsoft Corp.'s Bing search engine jumped 13% in the two weeks since it was re-launched, a trend that might encourage marketers to spend more with the software giant in the future.
The paid-click data released Tuesday by Efficient Frontier Inc, the world's largest search engine marketer, suggests Bing could become a significant revenue generator for the Redmond, Wash.-based software maker - if Microsoft can maintain its momentum.
"Those gains are significant in terms of revenue," said Justin Merickel, marketing vice president at Efficient Frontier, which places about $750 million in text ads on top search engines worldwide.
Though Microsoft lags far behind market leader Google Inc., the Efficient Frontier's data is the latest evidence that Bing, which was formerly known as Live Search, is off to a promising start.
Last week, market research group comScore Inc. said Microsoft's U.S. search market share - a reflection of the total number of queries - jumped from 9.1% to 12.1% in the first two weeks since Bing's launch.
Google has about 75% of paid clicks, while Yahoo Inc. is in second place with about 20%. Microsoft, by comparison, accounted for just under a 5% share of U.S. paid clicks.
With the U.S. search ad market valued at $12 billion this year, each additional point in paid-click share Microsoft gains would be worth $120 million in annual revenue.
Any sustained gains would provide an important boost for Microsoft's online services business, which includes search. The business reported a loss of $575 million, on revenues of $721 million, in the third fiscal quarter, ended March 31.
Efficient Frontier's findings are echoed by Marin Software, a company which makes tools that digital agencies use to plan Internet search campaigns. Marc Barach, the company's chief marketing officer, said customers are already spending more time planning campaigns on Bing than they were prior to its launch.
"In the past, our clients may just have bid on the most popular keywords for Microsoft, and focus most of their time and attention on Google," says Marc Barach. "Advertisers are now taking the steps to make sure they are fully represented across Microsoft."
Still, search engine marketers like Efficient Frontier, as well as ad agencies and Wall Street analysts, are quick to note that Microsoft must demonstrate it can sustain Bing's early momentum so it does not fade like earlier efforts did.
In a recent note, Jefferies & Co. analyst Youssef Squali recalled that Microsoft's "cashback" rebate initiative in May 2008 helped drive the software maker's search traffic up about 15% in the first month after launch, but those gains quickly evaporated.
James Kiernan, a digital marketing specialist for Media Vest, a unit of Publicis Groupe S.A., said the key will be whether Bing can sustain momentum after Microsoft completes a $100 million advertising campaign it launched to support Bing.
Efficient Frontier's Merickel said advertisers will likely start to dedicate a larger slice of their search budgets to Bing if Microsoft can sustain its gains over a two- or three-month period.
"Once they sustain that for a quarter, I think you will see advertisers start to reallocate their search budgets," said Merickel. "At some point it becomes a much more relevant volume for (advertisers) to actively manage."
Rob Garner, director of search strategy at digital marketing agency iCrossing Inc., was skeptical about Bing's ability to keep its momentum.
"There's a risk that it will fall back quite a bit. I think they have made a lot of gains as a result of the ad campaign. I think it will drop down quite a bit after," he said.
