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June 4, 2007

Microsoft search/ad boss Nadella speaks

Posted by Benjamin J. Romano at 6:45 PM

In an acknowledgment of just how high-profile his new job at Microsoft is -- and also of the acumen of his audience -- Satya Nadella said he slept little Sunday night in advance of a talk Monday at the Search Marketing Expo in Seattle.

Nadella, who has been at Microsoft for 15 years, moved in April from the company's Business Division to head research and development for a new group combining both Internet search and the advertising platform through which search generates cash. This puts him, along with Steve Berkowitz, among the top executives leading Microsoft in its head-to-head fight with Google.

Danny Sullivan, editor-in-chief of Search Engine Land, interviewed Nadella on stage and cut right to the rumor in the search world. TechCrunch, citing an unnamed source on Sunday, reported that Microsoft had deployed a team of "rock star" developers to build a next-generation search engine.

Nadella didn't bite. "Yeah, I think when they get it done they should send me a link so I will know about it," he said, offering neither detail, confirmation nor denial.

The conversation spread out from there. Here are some of Nadella's comments.

The biggest challenge in the core search business for Microsoft: "At some level when you are 10 percent share in the U.S., you really have to sort of face up to it and say, well, that's the challenge. The challenge is how we grow that share so that our advertisers are getting more audience, and then obviously you're not going to do that if you don't have a search engine that satisfies the searchers."

Adding additional perspective, he said Microsoft has about 55 million unique users of its MSN/Live Search service a month. That's about half as many as Google, Nadella said, but clearly the people using Microsoft's service are performing far fewer searches. Nadella said a big push on his team is rigorous study of what makes a user stick with Live Search or drop it for another search engine after a given -- presumably unsatisfactory -- result.

"There are lots of people even trying Live Search. The thing that we really want to be able to do is crack the code on how do we keep these users who are using Live Search doing more of their searches with us," he said.

Nadella said the company is trying to better integrate Live Search with the rest of its assets, such as its messaging and email services, as well as Outlook. Even the Microsoft.com home page only got a Live Search bar "just recently," he said.

Differentiating from Google and Yahoo!: Nadella read a New York Times story over the weekend that went behind closed doors with the Google engineers working to optimize its search engine. In one example, a Google search on the terms "teak patio Palo Alto" in 2005 failed to return a result for a small business in Palo Alto, Calif., called the Teak Patio. Nadella said Live Search displayed the business as the first hit.

Beyond ensuring search relevance, Nadella said Microsoft is aiming to make the entire page of results relevant to match the total package to the searcher's intent. This includes the advertising displayed on the right-hand side, an instant answers feature, and a display of related searches.

Another point of differentiation Nadella hopes to exploit is three-dimensional search results, in which results are placed within their geographical context.

On potential conflicts of interest arising from Microsoft's pending aQuantive acquisition: Nadella repeated the company line that Microsoft intends to keep Avenue A | Razorfish, the digital marketing company that's part of aQuantive. (Sullivan equated having both the marketing company and the search engine and Web sites on which advertising is sold to the New York Times running a public-relations agency.) Nadella said Microsoft will adhere to the safeguards aQuantive had in place to keep its ad-agency business separate and ensure advertising customers are not channeled toward Microsoft properties.

"We fully intend to make sure that the flexibility Avenue A has to service their clients as a neutral agency is absolutely going to remain," he said, adding that it will be run "at arm's length" from the rest of Microsoft's businesses.

On the branding confusion between MSN and Windows Live services: "At some level I want to say, hey I'm just the engineering guy. ... Both Windows Live and MSN have a place under the sun."


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