Read the following articles: In Challenge To Google, Microsoft Pays $6 Billion F
ID: 377543 • Letter: R
Question
Read the following articles:
In Challenge To Google, Microsoft Pays $6 Billion For Online Advertising Firm(https://www.informationweek.com/default.asp)
Microsoft is trying to grab a larger piece of the online advertising market, which represents a $40 billion opportunity that will grow 20% per year until 2010.
Fair Isaac Claims Pay-Per-Click Fraud Is 10% To 15%(https://www.informationweek.com/default.asp)
Google disputes the figures and has consistently taken issue with the methodology and motives of those reporting significant levels of click fraud.
What do you think about paying $6 billion for an Online Advertising Firm and why should Microsoft be worried about Click Fraud (especially with the number of people who dislike Microsoft)?
Explanation / Answer
Online advertising market, a $40 billion opportunity that will grow 20% per year until 2010 shall continue to draw interest from leading technology firms due to its promise of future returns. With the arrival of the internet, the world is connected and so are the million plus enterprises around the world. However, consider this - once we do a google search, only 10-12 results appear on the first page and we are unlikely to browse through the next result pages. If we have a closer look, search engines give millions of results for a single search, however we only look at only the top 5-10 results before proceeding. Thus, it is a challenge for enterprises to stand out and interest the customer.
At the same time, customers are businer than ever and decision making has become fast and instinctive. The attention span is limited and hence companies have to devise ways to grab the attention as and when possible. Thus online marketing today has become impertaive for cpmapnies to do well. This has opened up a huge opportunity for digital marketing companies which help firms in search engine optimization, retargeting, paid campaigns etc.
Microsoft being a technology company, and a pioneer in computer technology can see huge potential in the opportunity and hence is justified in investing this amount.
However, with more opportunities are there also more opportunities for fraud. Once such aspect is click fraud associated with pay per click model, where a marketing company is paid based on the clicks it has effected for a client company due to its digital marketing efforts. There shall always be a tussle between fraudalent clicks and algorithms to find out the genuine clicks which lead to conversions. Google is at the forefront of devsing these algorithms and is but natural for Google to refute the large no. of fraud claims.
Microsoft should be worried about click frauds as that is revenue lost for its clients. However, theopportunity is huge and with advanced analytics which is progressing every passing day, fraud clicks can be kept at a check if not eliminated. It is worthwhile to invest in Online Marketing for Microsoft.
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