With new ads, Google aims offensive at Microsoft Office

In the latest shot fired in Google Inc.'s ongoing battle with Microsoft Corp., Google announced that it's taking this fight to the streets.

Google is kicking off a month-long ad campaign for its online suite of enterprise office applications. The campaign will have the search giant leasing billboard space in four major U.S. cities — New York, San Francisco, Chicago and Boston. Each work day will have a different message for commuters to take in.

The move comes less than a week after Microsoft announced it is partnering with Yahoo on a search and online ad deal. The two companies announced that they had finalized negotiations on a long-anticipated deal that will have Microsoft's Bing search engine powering Yahoo's sites, while Yahoo sells premium search advertising services for both companies.

The deal is geared to hit Google with a united force much greater than either Microsoft or Yahoo could muster alone. Individually, neither company has much of an affect on Google and its overwhelming search market share. Together, though, they hope to at least make a dent.

Ezra Gottheil, an analyst at Technology Business Research Inc., noted that while Microsoft is busy going after Google's search market, Google is using the billboard campaign it go after Microsoft's bread-and-butter Office suite.

“Each company is targeting the other right now,” said Gottheil. “They're laying the groundwork for what they both see as an inevitable collision in the future. Right now, neither company is deriving much revenue from its presence in the other's space… Microsoft is more vulnerable because they must cannibalize some of their current application revenue to expand their application market, where Google only has to maintain a rough technical equivalence with Microsoft to maintain its search franchise.”

Google's ad campaign and Microsoft's deal with Yahoo are just the latest moves in this ongoing fight between industry giants.

In June, Microsoft unveiled its new search engine, Bing, an update to its far-from-beloved Microsoft Live Search. And with Microsoft's advertising power and a lot of media attention behind it, Bing has shown strong numbers just out of the gate. But with only 8.23% of the market, Bing has done little more than nibble away at Google share, which is just over more than 78% of the search market.

StatCounter CEO Aodhan Cullen described Bing's progress in the market as “steady, if not spectacular.”

For its part, Yahoo two weeks ago unveiled a beta of its newly overhauled homepage, whose promised features include the ability to integrate with social networking sites like Facebook, Twitter and Myspace. The changes are an apparent attempt to recapture some of the hip cachet the site had during its heyday.

The problem for Microsoft and Yahoo is that despite their efforts, Google still looms far ahead of both. And Google is aiming its sights on the enterprise.

Last month, Google took the training wheels off several key hosted Google Apps offerings that have spent years in beta-test mode. The beta label came off some main Google Apps services, including Gmail, Google Calendar, Google Talk and Google Docs.

Analysts were quick to note that it's a move geared to making Google Apps more appealing to enterprise users. With similar intent, Google this year also has come out with offline access and support for BlackBerry and Outlook users.