Keynote with Satya Nadella, VP of MSN Search

Danny Sullivan welcomes the new man in charge of MSN search, and revamping the product. He is a 15 year Microsoft veteran.

Satya Nadella: Microsoft is working on lots of innovation in the search space, and is proud of the search team. Says much of the search technology is being developed in Silicon Valley and around the globe, including China.

DS: You’ve been at your new job for a month, what are your goals?

Satya Nadella: The industry has evolved, and its been a fantastic journey. Says there is alot of desire and fire to contribute to the domain, and his team is always thinking ahead. Taking risks and innovation are the main goals.

DS: Any big surprises?

Satya Nadella: The logic of bringing search and engineering team together is crucial. Overall, Microsoft is new to the industry and the team has been great and focusing on satisfying customer needs.

DS: What do you see as the biggest challenge of core search?

Satya Nadella: At some level, when your share is 10% in the US – that’s the challenge. Grow the share. Get more for the advertisers. Build an engine that satisfies searchers needs. If we look at the 55 million searches a month on MSN, compared to Google at around 120 million – it’s not bad. It’s a first step. We need to crack the code of engagement. We have over 5 million registered users. New people are trying live search every day. How do we get more people to use the product is key. The MSN audience wants content and getting search involved is the mission. There is a new search product called Alist. We are integrating search in Instant Messenger as an experiment. Same with Outlook – which is great for location based searches. Office is integrating with maps. Contextual search within Microsoft.com – recently got a Live search box. Getting contextual search of the ground is key.

DS: How do you distinguish between Google, Yahoo, Ask. Some would consider search a commodity. How do you shake that up?

Satya Nadella: One of the things he thinks about is all things will become commoditized over time. It takes alot to be in the search business and innovating. Think of the sofistication of search and data collecting. We are now at a level to compete. The point is innovation consistently and investment. How do you differentiate? Recognize that there is info beyond the 10 links. Integration of weather, sports, stocks, answers. Taking related search to the next level. Images is another place where we have been innovative and got good feedback. New technology in facial recognition. Take what’s going on in the industry and move forward with it. Investing in 3D web – over 140 cities in 3D models. 3D web is the future and great for navigation for local information. Mobile is big. We have a rich Windows mobile application and some rich data. Horizontal and vertical innovations being brought to the table along with the core investment in the search business and getting better.

DS: Horizontal or Vertical, what do you think will be strongest?

Satya Nadella: Mobile, local, proximity search, images, videos, are all important. We think 3D web is the most important.

DS: The biggest challenge is more traffic. What’s going on on the advertiser side?

Satya Nadella: Adcenter – we’ve made lots of progress in a year. We focus most on the feedback of this audience and usability of Adcenter. The last update had much innovation and addressed those core issues. Full text search across Adcenter, campaign uploads, better navigation, emphasis on basic usability. Contextual is just starting using Adcenter. It’s in a pilot, and slowly growing and yielding high click thrus – similar to search. That’s how we expect to get more traffic. Adlabs.Microsoft.com has many interesting features – such as keyword services platform. Using keyword intelligence using keyword forecasting and extraction and exposing it to the SEM folks. Opening up keyword intellegence helps marketers. Other places we focus on is supporting new ad types. New technology called Seadragon – and an infinite zoom capability, is another place you will see innovation.

DS: Explain why you paid so much for Aquantive, why not build it yourself?

Satya Nadella: We definately develop much in house, but this is the most complimentary with assets. They have the footprint, and tools. It’s complimentary.

DS: Many search marketers ask how you can own the agency and the engine.

Satya Nadella: Aquantive has technology and an agency. They have both. We want to take and retain the Aquantive leadership. We want to reinforce what Aquantive has done to keep the businesses separate. The idea of integrating the technology while servicing an agency is something Aquantive felt was key to their success. We want to build on it and improve it.

DS: The difference between Aquantive having the tools – it’s as if the NYT is running a PR agency. People may not trust the relationship. What do you make of that?

Satya Nadella: It all comes down to the policies of Avenue A and the flexibilities, and serving the clients neutral. Time will tell how we do it. We will make sure that Avenue A’s clients will only benefit from the acquisition.

DS: How are you and Steve Berkowitz interacting?

Satya Nadella: Steve runs the business. I run the engineering pieces. We have a good ryththm. He runs the businesss. I run the engineering. I look forward to the association. Bringing the engineering leaders together is key.

DS: There was a shift to the Windows Live brand, and now you are going back to MSN. What’s the focus?

Satya Nadella: MSN is the portal. That’s where the traffic is. There should be no confusion between the search and the portal. Windows Live is the extension and the search experience – ie. Hotmail. At the end of the day we want the MSN brand. Yes there could be more clarity and there are smarter brains working on that. Both brands reinforce eachother.

DS: Here you are with the job to make search better. How did you prepare?

Satya Nadella: The beauty of Microsoft, the last 15 years I’ve worked in every part of the business from Windows to Office to online. It’s thrilling to be with an audience like this. Come Q&A my fears will come true (laughs). While I take my morning run, I listen to a data mining class. At the end of the day my job is about enabling the great people around the globe to do great work. My job is to remove the friction. Taking the fire and enabling that.

The Q&A:

Q: I’ve been using MSN Live for the last 1.5 years. What are your plans in the next 5 years? Where are you going internationally? What are the main goals to grow the business?

Satya Nadella: On the search side, we want to show innovation. How do you take the Live search users and have them use it more. We look at abondonment rates and ask why people didn’t come back. We are scientific. Thats our core. We are experimenting. We know the audience, and we want to do things in a more contextual way. Integration with Office, Hotmail, etc. Long term – one of my dreams is the best search interface just for doing a query and having a results? Or is there more to it. Continuity – there is tons of innovation. We are in the first stages and will bring alot to the table.

Q: You offer corporate customers incentives to use search in exchange for software discounts, will there be any more of that? Also What happened to street level search photography?

A: Its a good idea and I’ll take it to my business colleagues. We definately are big on 3D. We have street level innovation of Seattle and other cities, birdseye view, all are unique aspects we want to take.

DS: With Google’s street view launch last week there are privacy issues. How do you deal with that?

Satya Nadella: We put the user in control. Users will vote. We will see how it plays out. We are expanding rapidly in this area.

DS: You are already doing aerial view, etc. Things like the Whitehouse and miliary get blocked out. Why is my house there? How do you see blocking out content from the birdseye views?

Satya Nadella: If you have the controls, ex post, or proactively. The benefit outweighs all privacy concerns. You will see us come to some equilabrium.

Q: Last month Google Universal search launched. What’s your take? Are you going in that direction?

Satya Nadella: If you look at us, and our services, we have much personalizaton like Google. We believe in the concept and are taking advantage of the full page real estate and tapping into intent. We believe in it. I believe in it. And you see us making progress.

Q: Are you commited to Firefox compatiblity?

Satya Nadella: We want to be everywhere the audience is. You are right that there are issues on Firefox, the Mac and Safari. We are taking feedback and addressing the issues.

DS: Polls audience on IE usage. Asks if you can develop a product that’s universal?

Satya Nadella: Absolutely. Demographically this audience has a different skew than the overall market.

Q: To influence Adcenter spending, will you help influence natural rankings?

Satya Nadella: That’s not what we’d like to do. We want to innovate and get the traffic. We want targetted relevant ads. It’s a give and take. It’s all about getting the end user the best results.

Q: I’m impressed with the evolution of Adcenter, and you have great customer service. My question is what do I tell my clients to get them to use MSN, why use MSN and not Google?

Satya Nadella: We have a better image search. 3D local listings that are differentiated. Product search. There is an aggregation of alot of these features. There are already alot of MSN searchers. Google has 50%. People use multiple search engines. That is the kind of reason from an advertiser perspective to be in all search engines. Cross section exposure is key.

DS: Thanks for the great party last night MSN. Poll – how many are Adcenter customers? Audience laughs. Why do people search on Microsoft for Microsoft (chuckles).

Satya Nadella: At the end of the day, the data is the platform. We are frequently releasing new products. I’m super glad to be here and in this space.

DS: Thank you Satya Nadella, and that you all for attending.

Tags: Danny Sullivan,Satya Nadella, SMX Seattle, SMX Advanced