Microsoft sees tailored search as way to pierce Google's armor

SAN JOSE, Calif.--Microsoft believes it's found a way to gain an edge against Google's dominant search engine: a deeper understanding of what people are searching for and what's on Web pages.

Specifically, the company believes examining a full sequence of user queries can lead to more useful results. Today, the company only keeps track of the immediately prior search, but often users use search engines to explore subject areas broadly, said Satya Nadella, senior vice president of Microsoft's search, portal and advertising platform group, at the Search Engine Strategies conference here.

"I believe this notion of understanding user intent--being able to analyze (search queries) and come up with search patterns and use them to shape the search experience--is one of the most important areas for us," Nadella said.

Many searches are quick operations to get to a specific site, but Microsoft is eying the in-depth operation search has become for many. Half of search queries at Microsoft's search site are part of a 30-minute session spent searching and checking Web sites, and at some point in that half-hour span Microsoft should be able to depart from "one-size-fits-all" search results to a more carefully tailored response, he said.

Of course, that kind of deeper analysis of people's search behavior--which presumably could be accompanied by more carefully targeted and perhaps higher-priced advertisements--could also raise hackles. Basing search ads on a few keywords typed into a search engine is less intrusive than basing them on an entire history of online behavior. Behavioral targeting of ads, though a concept that covers a broad spectrum of possibilities, is under increasing scrutiny.

Microsoft, which trails leader Google and second-place Yahoo, was thwarted in its effort to get ahead in the search market by acquiring either all of Yahoo or just its search assets. But Nadella takes the long view, arguing Microsoft only started its online search effort in earnest four and a half years ago. The Redmond, Wash.-based company will keep plugging away, trying to take advantage of "inflection points" where search technology changes significantly, he added.

"If we come again and again with innovation that matters, we will have the opportunity to grow our volume and our share," Nadella said. "We made decent progress but we have a ways to go."

A long way indeed. In a meeting with reporters, Nadella said he wasn't happy with Microsoft's share of search queries that's less than 10 percent. And upper management's deep interest in better results is evident not just from the Yahoo acquisition turmoil but from the company's successful acquisition of Powerset, a search start-up banking on natural language processing as a way to better understand Web page content and search queries.

"Bill has definitely not retired for us," said Scott Prevost, Powerset's general manager and product director, referring to Chairman Bill Gates' move to part-time work at Microsoft. Prevost also spoke during the meeting with reporters.

Powerset figures prominently in Microsoft's search work. The start-up's technology only made it as far as indexing and searching Wikipedia, but results, even from that relatively narrow domain, will be used to augment Microsoft's search results, Nadella said.

"You'll see us integrating that with Wikipedia articles," he said.

The Powerset technology can be used to better understand people's search queries and the Web pages that Microsoft's search engine indexes, Nadella added. "We think that tech, natural-language processing, is going to be a very critical way for us to improve relevance further, at scale," he said.

Google is of course a formidable competitor with a massive and fast-moving research effort. And while it may design its search engine for the broadest use possible, it certainly can take a user's search history into account. The optional Web History feature can adjust search results according to users' earlier practices. However, Udi Manber, head of Google's search quality work, said earlier this year that personalization has only a minor effect on the ordering of search results.

Microsoft has other ways it hopes to diverge from the one-size-fits-all approach. For example, Nadella said the company also hopes to redirect the search experience away from a generic interface depending on subcategories people are using, Nadella said, pointing to travel, health, images, and video. "These are the domains where we have domain-specific task-oriented" interfaces, he said.

The company also has ambitions for changing the business behind search, he said, pointing as one example to the Microsoft Live Cashback program, which converts the fees that search advertisers pay to Microsoft into rebates for people who buy products through the search mechanism.

Another business change coming for the search industry overall is the move toward more sophisticated payment schemes. Currently, advertisers pay search engines for ads when searchers click those ads, a model called cost per click (CPC), but the payment model will shifting toward cost per action (CPA), Nadella predicted. CPA requires more activity on the part of a searcher--registering for a service or buying a product, for example--before payment is made.

"CPC is fantastic. It will remain. But there will be additional things (such as) CPA," Nadella said. "We think that will bring next level of efficiency to the search marketplace. We're very bullish about that."