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Ballmer: One day, Bing will actually make money

Big Steve on Firefox, the iPhone, and search bribery

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Microsoft chief executive Steve Ballmer has insisted that one day, the company's Google-battling Bing search engine will actually make money.

"Search is going to be an ever-growing share of Microsoft's profits," the big man bellowed - literally bellowed - during a wide-ranging question and answer keynote this morning at the search-obsessed SMX West conference in Silicon Valley. "First, we've got to get to break even. And then we're got to get to profitability. And then we've got to grow share. That's how I do my math."

Reports indicate that Redmond has spent as much as $5bn on its nine-month-old search revamp, and the company continues to pour cash into the would-be Google killer - not only through continued development of the platform but also through its Bing Cashback program, a shameless effort to bribe people into using the thing.

If you use Bing search ads to find and buy certain stuff, Redmond will return a portion of the purchase price.

Asked how successful the Cashback program has been, Ballmer indicated it wasn't quite as successful as he would like. But he said the company will continue the program - and continue to tweak it. "I would say that it has worked, but it hasn't worked fantastically - in the sense that it has not completely changed the economic structure of the business, for the user or anyone else," Ballmer said.

"I expect we will continue Cashback, continue to rethink it, to try to do things around basic Cashback concepts to make it a more important thing for the merchant as well as the user."

A big part of Microsoft's push for Bing profitability is of course the Redmond software giant's search pact with Yahoo!, which was recently approved by European regulators. Bing will provide "organic" search results on Yahoo! by the end of the year, and Microsoft-generated search ads will likely follow sometime after. The primary aim of the pact, Ballmer said, is to improve the "relevance" of Bing's search ads, which are purchased via a "second price" online auction, as they are at Google.

"The quality - both from a marketer and a user's experience - of a search engine depends heavily on the relevance of advertising, and the relevance of advertising depends heavily on the density of bids," Ballmer explained. "The ability to put together Yahoo!'s volumes and Microsoft's volumes and use that in a way that improves the experience for what we call all-involved parties we think is absolutely fantastic."

Advertisers will be able to reach more "eyeballs" with a single ad campaign, and netizens will be more likely to, um, see ads they want to see. "We think there's a huge advantage to scale, just in terms of our ability to get more signals, do more tests, improve relevance, all those things."

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