Microsoft recently failed in its pursuit of Yahoo. It is paying people to use its search engine. Now Microsoft thinks it has found a promising source of users for its foundering search service: Facebook, the social networking site.
Microsoft said Thursday at a meeting with financial analysts at its headquarters in Redmond, Wash., that it would soon begin providing Web search services and associated advertisements by the end of the year on the American portion of the popular social network.
It makes sense in business the adage location, location , location is the mantra retailers use as one of the keys to successful business. “One of the issues with Microsoft search is that people just haven’t been exposed to it,” said Greg Sterling, founder of Sterling Market Intelligence, a consulting and research firm. “Familiarity and inertia keep people using what they use on the Web.”
To Microsoft, Facebook is a quick way to expand the audience for its search engine. More than 29 million people actively use Facebook in the United States. They will soon see prominent displays of Microsoft’s Live Search box on their friends’ and their own Facebook pages.
The agreement augments an existing advertising deal that the companies struck in 2006 and later expanded globally. Microsoft already sells and manages display advertisements on Facebook. Last October, the companies inched even closer together when Microsoft invested $240 millionfor a 5 percent ownership stake in Facebook.
The search deal could be a lift to Microsoft as it seeks to catch up with Google and Yahoo in the search business. In June, Google accounted for 61.5 percent of search queries in the United States, dwarfing Yahoo, with 20.9 percent, and Microsoft, with 9.2 percent of queries, according to tracking firm comScore. One of the reasons Microsoft pursued Yahoo so doggedly this year was to increase its share in the overall market.
The deal marks the second important distribution agreement for Microsoft’s search service in as many months. In June, Hewlett-Packard, the world’s largest PC maker, agreed to put Microsoft’s service on its desktops.