Strategic Research Portals MI Metrics™: Web Search Example

MI Metrics™: Web Search Example

Q4 2008 – Q2 2009

Background

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Northern Light overview

• Headquartered in Cambridge, Massachusetts

• 55 employees

• Founded in 1996 and purchased by employees in 2003

– Senior management 13 years with the company

– Profitable and cash flow positive

– Compound growth rate of 38% 2004 – 2008

– Up 30% for the first six months of 2009 over 2008

• Northern Light has a single business: provide strategic research portals, content, and research services to the world’s leading organizations

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Our current clients include many of the leading technology companies in the world

• Largest computer equipment manufacturer

• Largest IT technology services provider

• Largest IT security software company

• Largest mobile phone manufacturer

• Second largest global pharmaceutical company

• Largest pharmaceutical company providing medications used to treat psychiatric and mental health-related conditions

• Largest office supply superstore chain

• Largest package delivery company

• Largest disk drive manufacturer

• Leading property and casualty insurer

• Largest CAD/CAM solutions provider

• Largest telephone system operator

• Largest market research company

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Background

• This is examination of Web search engine coverage and commentary from IT Analysts (e.g., Forrester, Gartner, IDC etc.) in the news for the time period covering the last quarter of 2008 and first two quarters of 2009

• Each of the main players in the market (Google, Microsoft, and Yahoo) are examined

• Northern Light performed the examination using

– Northern Light Business News: 25,000 news stories per day from 8,000 sources, including 2,500 Industry Authority Blogs

– MI Analyst™, Northern Light’s proprietary text analytics and sentiment scoring engine

– Researchers on Northern Light’s staff

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Background (continued)

• In an actual client assignment, as opposed to this sample version, Northern Light could provide an analysis of commentary in IT analyst reports (from firms like Gartner, Forrester, IDC )in addition to commentary of IT analysts in the news

• IT analyst reports are important influencers in technology markets

– Roughly half of analyst commentary on companies occurs in analyst reports and half in news

– Need both sets analyzed for a comprehensive picture

• Also, this example limits the analysis to news commentary influenced by IT analysts, but in an actual client assignment this or any other limitation would be a client option

• Lastly, in an actual client example any research source can be included at the clients option

– For example, market research reports, industry conference proceedings, Web social media, other licensed news feeds, etc.

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Deliverables

• MI Metrics’ deliverables consists of four major items

– Point of View: Northern Light’s summary of the business significance of the coverage and the commentary

– Metrics: quantitative analysis of the press coverage or research given each competitor (commentary, share of voice, sentiment, and trends)

– Identification of publishers, journalists, analysts, and authors who are providing positive and negative commentary

– Quotes: comprehensive excerpts from the commentary supporting the major themes

Point of View

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Point of View - Metrics

• Microsoft's release of its new Web search engine, Bing, in Q2 ‘09 was the salient event that happened over this time period

• The release of Bing increased press reports of IT analyst commentary about the category significantly

• Amazingly, the release of Bing increased the positive IT analyst commentary of Google

– This could not have been the outcome that Microsoft was hoping for when it took the Bing story on the road with a press tour

• IT analyst press commentary of Microsoft’s Web search engine did increase as a result of Bing and the net sentiment expressed by IT analysts swung from negative to slightly positive

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Point of View – Metrics (continued)

• Meanwhile Yahoo appeared caught in the crossfire as

– IT analyst press commentary for its Web search efforts did not increase in volume like its competitors

– Yahoo IT analyst commentary reversed a trend toward a positive tone, with sentiment nose-diving into negative territory (once again)

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Point of View – Business Issues

• Bing may shake up the market

– Bing is trying to change the search paradigm by offering more value to users on the search result than Google does

– Microsoft has a lot riding on Bing in its long struggle to catch Google

• Even so, Bing will not give Microsoft the top spot it covets in Web search by any means

– Success in overtaking Google in market share is viewed as a long-shot by IT analysts

• And Yahoo will take the hit from Bing, not Google

• Google may have to refocus on Web search, leaving behind its attack in other areas where it competes with Microsoft

• All of this fighting of market share is in a Web search market ad market that is suffering from the current recession

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Point of View – Business Issues (continued)

• Mobile search is the market where Microsoft has the best chance against Google

• In mobile search, the battle continues

– Success in the mobile search market is seen as imperative for both Microsoft and Google by IT analysts

– Look for Microsoft to leverage its position with the Windows Mobile operating system – it has won some important deals

– Look for Google to leverage its Android platform to gain default status with carriers – but it is behind Microsoft so far

Coverage Metrics For Analyst Commentary In Press Media Articles

On the Web Search Market

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Press commentary by IT analysts Q4‘08 - Q2 ‘09

Positive Negative Neutral Total

Microsoft 7 14 53 74

Yahoo! 12 30 66 108

Google 47 3 64 114

Total 71 47 178 296

IT analyst commentary in the press mentioned Google and Yahoo about an equal number of times, but with very different expressed sentiment toward the different companies. Microsoft had less overall commentary and also a less favorable reception to its story than Google received.

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Positive

NegativeNeutral0

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60

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Num

ber

of

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tions

Coverage and sentiment by IT analyst group

Forrester and IDC provided the most sentiment-loaded press commentary about the Web search competitors, and it was largely positive. Frost & Sullivan and Gartner leaned toward the negative.

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Share of Voice for press commentary by IT analysts Q4‘08 - Q2 ‘09

25%

36%

39%

Share of Voice

Microsoft Yahoo! Google

Google only narrowly grabbed the highest Share of Voice from Yahoo when the three quarters are examined together. This is surprising considering that Google holds 65% of Web search market share. Overall, IT analysts are very interested in the “Yahoo story.” As we will see later, Bing increases IT analyst interest in Bing significantly.

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Net Positive commentary by IT analysts in press coverage Q4‘08 - Q2 ‘09

-20 -10 0 10 20 30 40 50

Net Positives are calculated by subtracting negative IT analyst mentions from positive mentions. Google was the only of the three to obtain a net positive sentiment score over all the IT analyst commentary in the press over three quarters. Microsoft was the most negative.

Google

Microsoft

Yahoo!

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Net Positive commentary by competitor

Microsoft and Google rise together. The release of Bing actually increased the amount of positive IT analyst commentary in the press for Google! Google maintains its dominant position in positive share of mind as far as analysts commentary in the news. Meanwhile, Yahoo falls alone - back into negative territory.

-20

-10

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30N

et P

ositi

ves Microsoft

Google

Yahoo!

Q4 ‘08 Q2 ‘09Q1 ‘09

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Coverage and sentiment toward Microsoft

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Q4 '08 Q1 '09 Q2 '09

Nu

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Positive

Negative

Neutral

The release of Bing generated much commentary for Microsoft in Q2 ‘09 – unfortunately for Microsoft, it was largely neutral. IT analysts just didn’t buy into Microsoft’s hoped-for spin.

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Coverage and sentiment toward Yahoo

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Q4 '08 Q1 '09 Q2 '09

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Positive

Negative

Neutral

Microsoft’s Bing introduction resulted in more commentary of Yahoo, but the spin on Bing knocked the wind out of the positive momentum Yahoo had begun to enjoy in the tone of press commentary.

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Coverage and sentiment toward Google

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Q4 FY '08 Q1 FY '09 Q2 FY '09

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Positive

Negative

Neutral

Google’s commentary and positive commentary soar as a result of the introduction of Microsoft’s Bing.

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Individual analyst sentiment toward Microsoft (for client follow-up)

0 5 10 15 20

Whit Andrews - Gartner

Caroline Dangson - IDC

Rebecca Jennings - Forrester

Bill Hughes - In-Stat

David Card - Forrester

Gartner - no analyst mentioned

Mike Davis - Ovum

Susan Feldman - IDC

Hadley Reynolds - IDC

IDC - no analyst mentioned

Neil MacDonald - Gartner

Jim McGregor - In-Stat

Forrester - no analyst mentioned

Andrew Frank - Gartner

Allen Weiner - Gartner

Shar VanBoskirk - Forrester

Number of Press Mentions

Neutral

Negative

Positive

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Individual analyst sentiment toward Yahoo (for client follow-up)

0 5 10 15 20

Rebecca Jennings - Forrester



IDC - no analyst mentioned



Susan Feldman - IDC

Andrew Frank - Gartner


David Card - Forrester

Allen Weiner - Gartner

Karsten Weide - IDC

Mukul Krishna - Frost & Sullivan

Shar VanBoskirk - Forrester


Neutral

Negative

Positive

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Individual analyst sentiment toward Google (for client follow-up)

0 5 10 15 20 25

Allan Weiner - Gartner

Charlene Li - Forrester

John Pescatore - Gartner

Nate Elliott - Forrester

Mike Davis - Ovum


Charles Golvin - Forrester






Neutral

Negative

Positive

Analyst Commentary In the News: Quotes

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Analyst quotes and commentary

• Bing is seen as hoping to change the search paradigm

– “Microsoft's Bing will change the face of search . . . Bing focuses on delivering answers, not Web pages.”

– Shar VanBoskirk, Forrester Research

– IOL Technology, May 29, 2009

– “They've highlighted some key areas where they're going above the concept of 10 blue links.”

– Allen Weiner, Gartner

– silicon.com, May 29, 2009

– “A distant third place in the search engine game, Microsoft hopes that this engine will help it gain more searcher share by delivering results and content more relevant to how users actually search.”


– Forrester Blog, May 28, 2009

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MI Metrics™ for Analyst commentary in the News Analyst Quotes And commentary

• While Bing is not revolutionary, it represents serious improvements for Microsoft and puts it on par with rivals

– “Gartner Group analyst Allen Weiner agreed that Bing isn't presenting a radical new way to search the Web. ‘I don't see anything that you can say, wow, I can't do this on Google or Yahoo,’ he said . . . However, what Bing does provide Microsoft is a way to catch up to what competitors have now in terms of features . . . ‘It's a marked improvement from Live Search . . . ‘They've done a lot to make the interface more usable, to make it cleaner-looking -- a lot with the algorithms to make the search results on par with their competitors for most searches.’”

– Allen Weiner, Gartner Group

– PC World, May 28, 2009

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• Microsoft has a lot riding on this step and must pull it off

– “Microsoft has really trailed miserably the Google success in the search space . . . They really need to come up with something extraordinary to change the momentum. And they're making a big attempt with this release to change the field. They're taking on changing people's expectations about what using search should be -- the experience of using search.”

– Hadley Reynolds, IDC

– Tech World, May 29, 2009

– “Kumo [Bing’s pre-release codename] is Microsoft's ‘last chance’ to get search right as it cannot afford to launch another product that fails to engage with internet users. ‘If Kumo is going to be a success it needs to become a verb. For example 'I Kumoed you', I'm not sure that will happen.’”

– Mike Davis, Ovum

– Telegraph, May 20, 2009

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– “Clearly Microsoft has to differentiate itself. Looking to overtake Google is brave, even Yahoo! will prove a challenge. People are so used to Google, shifting them will be hard . . . Bing will live or die on how clever it is, and how it learns what consumers want. It is creating a brand from scratch so marketing will be crucial.”

– Rebecca Jennings, Forrester Research

– The Independent, May 29, 2009

– “. . . the new tool is part of Microsoft's long-term plan to move beyond its stronghold in the PC operating system business and capture a more significant Web presence. ‘They need this for their future growth,’ . . . ‘With everyone moving toward a lightweight, mobile Internet, people don't need a PC or a big operating system. It's a big change. Microsoft doesn't need to unseat Google but they do need to get a Web presence.”

– Jim McGregor, In-Stat

– PC World, May 28, 2009

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• Bing – no guarantees, present or future

– “. . . can Bing get people to switch? That's more of a long-odds proposition.”

– Andrew Frank, Gartner

– eWeek, June 10, 2009

– “They will be competitors against Google and Yahoo, but all that does is get them caught up . . . Let's say Bing puts Microsoft on an equal footing with Google and Yahoo considering the fact that players will continue to innovate; how quickly can Microsoft add more cool bells and whistles so it not only stays competitive but finds a way to inch ahead and come up with some element it can use to further (itself) in the market?”

– Allen Weiner, Gartner

– CIO Today, May 28, 2009

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• Bing is seen as a threat to Yahoo, not Google

– “However, because Bing is similar to Yahoo in its approach to search, it makes sense that it would take share away from Yahoo before it would Google's search engine . . .‘Bing is a greater threat to Yahoo than to Google because Yahoo has been sort of the content search engine and Google has been the utility search engine’ . . . ‘In other words, Yahoo has taken more of a ‘concierge approach’ to search, organizing its search results more based on what information other users have found useful in the past and based on services that can be offered around a search result’ . . . ‘This gives Yahoo's results more of the feel of a traditional Web portal than merely providing people with a list of relevant searches. Google, on the other hand, is more of a toolbar’ . . . ‘With Google's utilitarian approach and Bing and Yahoo being the more portal-based approach, it's easier to think why they would be more competitive.’”


– The Industry Standard, June 5, 2009

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• Google is top dog in search

– "It's really the branding that drives people to Google . . . They're the Kleenex of search.”

– Karsten Weide, IDC

– CNN, May 6, 2009

– “IDC survey data shows that searching is the number one online activity for U.S. consumers and consumers convey the most trust and affinity for Google above all other online Internet brands.”

– Caroline Dangson, IDC

– PC World, February 2, 2009

– “From a search perspective, Microsoft needs Yahoo and Yahoo needs Microsoft if they are to create a credible alternative to Google.”

– Neil MacDonald, Gartner

– PC Advisor, January 16, 2009

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• Though the threat in search may be greater for Yahoo, Bing could prove to be a distraction for Google

– “If Microsoft invests in improving Web search, then Google must respond with similar investment . . . That means Google doesn't have as much to invest in competing in things where Microsoft is ahead.”

– Whit Andrews, Gartner

– Knight Ridder/Tribune Business News, June 8, 2009

– “. . . Bing has to convince people that there's something wrong with their current search experience; that’s the theme of their ‘Overload’ campaign . . . So far as it sows the seeds of discontent, that could create an opportunity, and makes it imperative for [Google CEO] Schmidt to continue on his promise that Google will continue to improve.”

– Andrew Frank, Gartner

– eWeek, June 10, 2009

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• There is a battle looming for the mobile space

– “When you look at where its growth opportunities are, the next billion Internet users are much more likely to use a mobile phone to access the Internet, not a PC.”

– Charles Golvin, Forrester

– CRM Buyer, November 25, 2008

– “When I've worked with [Microsoft], they are a very, very competitive organization . . . They are very aggressive. When you get on the list of being a competitor, you never get off. Google is coming after Microsoft [in the mobile arena], and Microsoft is up for the challenge.”

– Bill Hughes, In-Stat

– Search Mobile Computing

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• In the battle to be the default search for carriers Google looks to leverage its Android platform while Microsoft throws its money (and weight) at the challenge – both are viable options

– “The presence of new Android phones will give [Google] a better negotiating position with the carriers.”

– Charles Golvin, Forrester Research

– CRM Buyer, November 25, 2008

– “I’m sure Microsoft is giving these companies good deals to get carriage but that's not necessarily a bad thing . . . People will use what's on the screen to do the searches so that’s important for Microsoft even if they do wind up overpaying a little.”

– David Card, Forrester Research

– Arizona Republic, January 7, 2009

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• Declining ad revenues will be challenging Google (and all the players) for the near future

– “U.S. online ad revenue may shrink this year by six percent compared to 2008. Google’s growth in search ads cannot offset drops in display and classified ads.”

– Karsten Weide, IDC

– BNET, April 22, 2009

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Contact information

• Priscilla Seuss, Vice President of Sales

• [email protected]

• 617-794-8095

• Address:

Northern Light10 Canal ParkCambridge MA 02141

Documents

Strategic Research Portals MI Metrics™: Web Search Example