MSN Seeks to Improve Search

MSN is creating technology to improve the relevance of its search results, but will continue to rely on outside partners to provide paid search functionality, in which advertisers pay for placement. The move will help MSN reduce its dependence on third-party search technology provider Inktomi (owned by competitor Yahoo), prevent users from defecting to market leader Google, and could be a precursor to making Internet search a key feature of the next version of Windows, code-named Longhorn.

No Plans for Paid Search, MSN Insists

MSN currently contracts with three partners to provide search results. LookSmart and Overture provide paid search functionality, splitting with MSN the revenue from advertisers who appear in relevant MSN search results. Inktomi provides a combination of paid and nonsponsored, or “algorithmic,” results.

In Apr. 2003, Microsoft began adding staff to MSN Search. Because paid search is one of the most lucrative new businesses on the Internet—according to the Internet Advertising Bureau and PricewaterhouseCoopers, revenues from keyword searches grew more quickly than any other form of online advertising in 2002—and because MSN is under pressure to become profitable, many analysts suspected that MSN was planning to bring paid search functionality in-house. The fact that MSN signed a new contract with Inktomi in Feb. 2003 also suggested that Microsoft was happy with that relationship and saw no immediate need to undertake its own efforts in algorithmic search.