Advance08: Bill Gates and Satya Nadella

Changing the Game in Search and Advertising
Bill Gates - Chairman Microsoft

The Future of Search
Satya Nadella - Senior Vice President, Search, Portal & Advertising Platform Group, Microsoft

Processing is now essentially free today - transistors cost $.0000001 today. The actual impact is more qualitative than quantitative. Computers can’t see but in years to come software will be capable of seeing and processing that data. Microsoft Surface is the first step in this direction and being use at retail already. They are calling this Natural Interface. Where we mostly use a keyboard and mouse will be replaced with new interface devices. Computers have been very oriented to single person interaction. These new interfaces will allow for multiple person interaction. Low cost processing is driving this.

Storage is also essentially free. 1997 cost per gig was $78 in 2006 it was down to $.40 per gig. Training programs and media now are online vs old style tape based distribution. Media is now easily portable and distributed widely. The cost of data storage is so negligible that we can drive innovation faster. Korea has a commitment to move away from textbooks. Students will have tablets with content and for note taking. The move to a digital lifestyle is happening at different paces in different countries.

There is a boundary between the pc and tv. You don’t get online media showing up in your TV guide. Soon we’ll be able to sync this data automatically as opposed to today’s very manual process to do that. There is also a boundary between your pc and your phone.

The Digital Revolution is at a very early stage. Microsoft stays abreast of this with their research department that draws on bright minds around the world.

Let’s look at finding information. Start with Search. Search is driven by task and learning requirements. The term Information at Your Fingertips is broad definition of the tasks around research, online shopping and more. Search is everywhere, email, pc, online. SharePoint is an example of organizing information at the business level. Web search is a piece of Information at Your Fingertips. Search should be integrated as you are creating a document not as a separate application where you retype your data.

Bill says it’s kinda fun to be an underdog in search and he is showing a slide of kudos that Microsoft has begun to receive as it grows in search. Maps and specific types of searches are pushing things forward and innovating. Every 6 months something substantial is released from Microsoft. Microsoft has a long term commitment and a talented team to improve on search.

Now Bill is demoing Live Image search and showing how processing has enabled different ways to search and refine and identify images. Next is video search and how Live can identify scene transitions and play specific portions of videos.

Microsoft’s big bets:
- Microsoft assets will enable Information at Your Fingertips
- Search is going to change
- New innovations and business models will both be key

Microsoft Assets:
- Search is about software
- Operations that scale
- Long term investment strategy
- Online audience
- Spanning work and home

The Evolution of Search
Search - phase one was directories and has evolved to keywords
Economic Model - started at CPM and has moved to CPC

There are some disruptive forces to search such as understanding user intention, advertising efficiency and content in context. A pure keyword approach has limits. People want refinement. Travel search is an example of a model that is very limited in user intent and history. The context of user personalization for targeting is going to be a huge driver of value and efficiency. The boundary between search and display will start to be broken down.

The next phase of search is going to be rich semantics and user experience with a business model that consists of consumer reward and paid engagement.

Microsoft Live Search seeks to:
- deliver the best search results
- simplify key tasks
- innovate in the business model
- deliver the best commerce search results
- simplify key commerce tasks
- reward consumers and advertisers for their engagement

Bill is now officially announcing Live Search Cashback.

Cashback gives you a particular reason to use a specific search engine. It creates economic value for consumers and advertisers.

Satya Nadella is coming up now to talk about Delivering on Commercial Search.

Microsoft Live Search seeks to:
- deliver the best search results — selection and relevance
- simplify key tasks — experience, intelligence, multi device access
- innovate in the business model — cashback and paid engagement

Microsoft is continuing to grow the index and improve the quality. There are over 3 billion images in the index now and over 20 billion documents. Live has 14 million local business listings as well. The goal is to make all that data more semantically rich to understand the relationship between all these entities.

Simplifying tasks is bound by getting to the intent of the user. If you are shopping you may want to know what people are saying about a product. Microsoft mines the web for comments and applies sentiment analysis to create the Opinion Index to help simplify your research task.

Satya is now demonstrating the integration of Farecast into Live search. He has typed in a query about flights from SEA to SFO. You get back a Instant Answer from Farecast with pricing and some prediction of if it’s a good time to buy if prices are going up etc. You pick the dates and Live Search Farecast goes out and mines the data from many sources, airlines and aggregators and provides a variety of refinement tools. The tool extends as well to hotel search that has over 100K hotels indexed and growing.

The next demo is product search. The search query being used is “gps system”. The result once again contains and Instant Answer of popular products as well as web results and buying guides. When you are ready to buy you click through to Live Search Products and then refine by price and user opinion. The user opinion refinement is unique to Live Search. They use sentiment analysis to determine what is important to the consumer - features, details, prices etc. The entire product search experience is available at m.live.com as well. Great for comparison shopping while you are in the store. Simplifies your offline shopping tasks as well.

LiveSearch Cashback is up next.

Search is a 20billion dollar marketplace today and there is an opportunity to innovate in this area. Live Search Cashback is the vehicle to drive this and change the flow money to benefit users and advertisers.

Demo time. Search for digital cameras on Live Search. The top ad is flagged as Live Search Cashback vendor. Click on the ad and you go into the Cashback system. Select your camera and you get a list of vendors that are bidding via offering different cash back rates. You choose the best deal that works for you and click through to the vendor’s regular online shopping system. After the transaction you get an email about how to redeem your rebate. You cannot collect your Cashback for 60 days due to return policies at vendors.

How will Microsoft measure progress of Cashback?
- Number of products
- Advertiser ROI
- Commercial query volume growth

Bill has come back to close out the session.

Part of all this innovation is the move to be more measurable.
- Stronger ROI
- Improved customer satisfaction
- Eliminating click fraud

Cashback has launched with good momentum with over 700 merchants and over 10 million product offers and nearly all verticals. Bill says working with ebay has been great as a key partner in Cashback. Last year ebay accounted for nearly 9% of world wide ecommerce volume.

Other key partners include Barnes & Noble who believe Cashback will help them improve there advertising ROI. Sears also believes Cashback will benefit the customer and lower Sears’ CPA. Zappos sees Cashback as taking the risk out of their online advertising spend.

Looking ahead Bill feels we’re at the very beginning of many things and there is so much more that can be done. Microsoft is about having the best search results and the best user experience.