At Microsoft, a Renewed Push for Small Business

Microsoft has pitched its new chief executive, Satya Nadella, as a master of the cloud, a technical whiz steeped in the gospel of “big data.” But a decade before Nadella took over the company’s cloud business, and six years before he helped build Bing, the CEO managed software products for small and medium-sized businesses.

As Nadella looks to revive the aging software giant, two of the product categories he helped to build — search and small business — are set to take a larger role. Over the past year, Microsoft managed to grow Bing’s market share — albeit, marginally — while investing in expanding its advertising presence among small businesses. Part of the effort is to use its search business as a springboard to bring advertising to a host of other platforms, many of which have never before been a home to ads.

Ginny Sandhu, a manager of Bing Ads for Local and Mobile, said Monday that the company has renewed its effort to reach small businesses over the past 18 months and plans to bring high-touch projects — like a recent integration between Pizza Hut and Xbox that allow its 48 million subscribers to order pizza through a gaming console — to a much larger and resource-constrained SMB segment.

“From a ‘potential’ standpoint, the opportunity is huge,” Sandhu told Street Fight during an interview at the Local Search Association conference in Huntington Beach, Cailf., Monday. “So far, we haven’t done a great job integrating everything and exposing it in an easy-to-use fashion. But getting to the point, where we can say you can truly leverage the entire Microsoft ecosystem in a way that’s scalable for a small business is one of our key initiatives.”

The marketing business is on the up and up at Microsoft. Online advertising grew 16% last quarter, due in large part of a 38% jump in search revenues. According to ComScore, Bing’s share of the search market grew from 16.7% in February 2013 to 18.4 % a year later — a marginal increase but impressive achievement given Google’s remarkable domination of the industry.

Last year, the company began piloting Bing Ads Express, an advertising tool aimed at small businesses and the companies which manage marketing on their behalf. But in order justify the costs of entering an expensive — although potentially lucrative small business segment — the company will likely have to offer more than Bing’s comparatively small search audience (versus Google.) One way to do that would be to tap into the hundreds of millions of users as they interact with Xbox, Skype, and its other product lines — a move that would require a substantial de-silozation of its products.

As the company works to adapt its products to a changing software market, Microsoft has focused attention on finding new ways to monetize products like Skype and Xbox, which already have strong roots on the web. Sandhu says that while Bing is the core of its local sales efforts, the company is increasingly thinking about search as one point of much larger performance advertising machine.

“As an industry, we have always talked about search or display advertising but at some point, the line starts blurring,” said Sandhu. “The conversation needs to move from selling search as a keyword-based product to a performance product that spans multiple forms of media.”

Steven Jacobs is Street Fight’s deputy editor.