Search advertising revenue grew by 21% in 4Q15
Previously in this series, we learned that in 4Q15, Microsoft’s (MSFT) D&C (Devices and Consumer) segment saw revenue fall to $1.3 billion, a 13% decline on a YoY (year-over-year) basis. Less revenue from the segment’s Phone Hardware, Windows, and Office Consumer lines were to blame.
Nevertheless, the loss was offset to some extent by D&C’s Other revenue, which rose to $538 million, a 31% increase YoY. Strong revenues from Xbox Live transactions, search advertising, and video games contributed to this growth.
In 4Q15, Microsoft’s search advertising revenue increased to $160 million, a YoY increase of 21%. Bing, higher revenue per search, and an increase in search volume all together led to increased search advertising revenues.
These increases suggest that the company’s efforts to realign its various device and service segments are creating revenue opportunities. The company is leveraging its services across the multiple search, gaming, content, and advertising platforms in its portfolio.
Bing now has more than a 20% market share of the US search market
Microsoft and Yahoo! are search partners, but it’s believed that the slow and steady rise of Bing’s search engine has come at Yahoo!’s expense.
Microsoft’s integration and partnerships with Yahoo! (YHOO), Amazon (AMZN), and Apple (AAPL) enabled Bing to command 20.3% of the US desktop search market in 2Q15. As the chart above shows, that represents an increase of 110 basis points YoY. This is the first time its market share has surpassed 20%. In its 4Q15 earnings release, Microsoft’s management stated, “Bing is expected to be profitable in FY16.”
Microsoft has integrated Bing search technology into its existing products including Xbox, Windows, MS Office, and Windows Phone in an attempt to get users to Bing away from Google. But Google remains the dominant search engine. According to research firm StatCounter, Google commands 87.95% of the global search market. Bing and Yahoo! had 4.4% and 3.87% shares, respectively, as of March 2015.
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