Microsoft’s Bing search engine is indeed gaining some share of search queries in the US market (globally, Bing is nowhere). But it is gaining this share at an absolutely mind-boggling cost. Specifically, Microsoft is gaining share for Bing by doing spectacularly expensive distribution deals, deals that don’t even come close to paying for themselves in additional revenue.
How much is Microsoft spending to buy market share for Bing?
Based on an analysis of Microsoft’s financial statements, Bing is paying about 3X as much for every incremental search query as it generates in revenue from that query.
What does that mean?
It means that for every $1 Microsoft generates from each new search query it buys, it spends $3 to get it.
(And that’s just direct costs–the costs of obtaining and processing the query. It doesn’t include sales and marketing, research and development, and general and administrative costs–all of which are subtracted from the -$2 Microsoft has already lost on every new query.)
Don’t believe it?
Let’s go to the numbers.
via Business Insider – Can We Please Stop Pretending That Microsoft’s Bing Is Doing Well?. Is Bing at this point helping or hurting Microsoft?