Sunday, November 30, 2008

Perceptual Map of MSN, Yahoo and Google

A Perceptual Map is a marketing tool to graphically compare consumer attitudes towards competitor companies. Most commonly, two salient characteristics of the market niche occupied by the companies are used to form a two dimensional map that shows how each company fares with the customers of that market segment.

Online services is becoming an important market segment for Microsoft. Marketing Vox (2007, p1) reports that Steve Ballmer, Microsoft CEO, sees advertising revenue earned by Online Services as contributing 25% of Microsoft’s business in future. Such advertising revenues will help support the Microsoft Cloud Computing initiative code-named Azure (see Mackey, 2008, p 1) and Software as a Service (SaaS) offerings.

Already its competitors are starting cloud computing and SaaS services that Gartner believes will soon be “good enough” (see Smith and Austin, 2007, p 1). The top two competitors to Microsoft MSN in Online Services are Yahoo and Google. There are two dimensions I propose to use in assessing corporate customer perceptions of these three largest Internet sites. The first is the market perception of the corporate services that are offered by each vendor.

The other dimension is social capital. As I have argued in the Open Source Gamblers Ruin posting (see Gambler's Ruin), “strategic buyers” are an important customer segment for Microsoft generally and the most profitable customer in terms of sales revenues. These customers are corporate and governmental organizations that would have a major impact on Microsoft if they shift away from Microsoft to its Open Source or Web Portal competitors because they are big buyers. A move like that would reduce Microsoft revenue while significantly enhancing that of its competitors. In addition, by being big buyers, they also attract advertisers so that they have significant meaning for MSN operations. Therefore, the second dimension in this perceptual map is the social capital each competitor has with corporate customers.

Buchanan (2002, 201-204) gives a laymen’s explanation of social capital as the “ability of people to work together easily and efficiently based on trust, familiarity and understanding.” In lieu of a formal survey, I will use the sales, marketing and consulting employee counts of each organization as a proxy for social capital thay have with large corporate customers. This seems reasonable; the greater the investment in marketing communications between one of the vendors and the corporate world it serves, the greater the social capital.

To calculate the correlation strength of each vendor in the social capital dimension, I normalize employee counts to a percentage by summing all employee counts and dividing the total count into each company count. The employee counts are derived from the SEC 10-K filings for each company. Here is the raw data:

Here is the relative percentage of employees dedicated to marketing communications and services in the three organizations, reflecting social capital strenths:

For the other dimension in this map, the portal corporate functionality, I will use Tancer’s market ranking comparison of the three sites that is published at HitWise. However, not all attributes Experian tracks are related to corporate interests. For example, sports, dating, games, personalities and music would not be. The following are the Search Portal characteristics I will use in the perceptual map: Portal Pages, Email Service, Search Engine, News/Media, Business Information, and Maps.

For the corporate portal functionality dimension, I use a balanced scorecard approach based on those rankings in Tancer’s survey. The notion is that the current market share ranking of each Web site reflects the market’s perception of the company’s ability in each of these categories: Portal Pages, Email Service, Search Engine, News/Media, Business Information, and Maps.

Here is the score card calculation based on rankings in those categories:

Here is the relative strength of each ranking factor:

Combining the Portal Functionality numbers with the social capital, we then get the following sets of coordinates for our perceptual map:

Here is a perceptual map based on those coordinates:

I included a desired point in the map that would reflect the combined strengths of Yahoo and MSN, which is what I believe Microsoft was after in its merger attempts with Yahoo.


Buchanan, Mark (2002). Nexus: Small Worlds and the Groundbreaking Theory of Networks. Norton.

Keller, K (2008). Strategic Brand Management. Pearson/Prentice-Hall.

Mackey, Kurt (October 27, 2008). Microsoft has head in the clouds with new Windows Azure OS. Retrieved on November 19, 2008 from

Marketing Vox, (October 4, 2007). Ballmer Sees Ad Revenue as Microsoft's Future. Retrieved on November 19, 2008 from

Rosoff, M (October 23, 2006). The Future of MSN. Directions on Microsoft. Retrieved on November 22, 2008 from

SEC (12/31/2007). Yahoo Form 10-k. Retrieved on November 26, 2008 from

SEC (2/15/2008). Google Form 10-K. Retrieved on November 26, 2008 from

SEC (June 30, 2008). Microsoft Corporation Form 10-K. Retrieved on November 19, 2008 from

Smith, D and Austin T (June 5, 2007). Microsoft and Google: Who's Going After Whom? Gartner Research, ID G00148622.

Taft, Darryl (October 10, 2007). Ballmer Talks Cloud, Advertising, SAAS. eWeek. Retrieved on November 19, 2008 from

Tancer, Bill (August 3, 2006). Google, Yahoo! and MSN: Brand Association. Hitwise Intelligence. Retrieved on November 22, 2008 from

No comments: