TELECOM Digest OnLine - Sorted: Microsoft Plans Launch of Search Ad System

Microsoft Plans Launch of Search Ad System

Allison Linn (
Sat, 14 Jan 2006 15:39:24 -0600

By ALLISON LINN, AP Business Writer

Microsoft Corp. plans to launch its system for selling advertising
alongside regular search results by June in the United States, giving
the company its next piece of ammunition in the battle with rivals
including Google Inc. and Yahoo Inc.

Microsoft has been testing its ambitious new platform for selling all
kinds of online advertising, called adCenter, since last spring. Right
now, the company said about 25 percent of the sponsored links that
accompany regular search results on its MSN Search site are from
adCenter, but that will grow to 100 percent by the time the company's
fiscal year ends in June.

Redmond-based Microsoft currently outsources the job of providing such
sponsored links to a Yahoo Inc. subsidiary, Overture Services,
although the contract between the two expires in June.

The move to bring that job in-house is important because competitors
such as Google make most of their money selling ads placed next to
search results.

The launch is also a major step toward Microsoft's broader adCenter
ambitions, which executives say will eventually be a system for
offering companies ways to buy online advertising space on multiple
platforms, ranging from its blogging sites to its newly launched
Office Live system for offering business software and services online.

For that broader effort, Microsoft's adCenter researchers and
developers are finishing up a series of tools that aim to provide
extremely detailed demographic information, so advertisers can more
accurately target their ads to the right audience. Many of those tools
are expected to be available in the next six to 12 months, said Tarek
Najm, adCenter's general manager.

Much of the work is being done by Microsoft's adCenter Incubation Lab,
or adLab, which was also announced Thursday.

AdLab is a joint effort between Microsoft's Redmond-based adCenter and
experts in its Chinese research lab. Najm said it marks the first time
that a Microsoft product group is working so closely with one of
Microsoft's research labs, which are typically staffed by researchers
who study far-flung, futuristic or just plain quirky technology.

Najm said his group wanted to partner with the Chinese researchers
because of their expertise in fields that will provide the technical
and computational backbone for getting advertising to the right

The Chinese and U.S. researchers on Thursday previewed a multitude of
those tools at its Redmond campus.

Overall, they aim to give advertisers a better sense of the age,
gender and other traits of people who are viewing certain information
online. For example, the technology could give a car advertiser the
best shot at reaching women over 45, or men under 25. A movie company,
in turn, could be given a better chance of reaching people who are or
have recently visited sites related to entertainment.

Microsoft said it is not using personally identifiable information to
target the ads.

Forrester analyst Charlene Li said Microsoft's platform has definite
potential to go head-to-head with competitors such as Google and Yahoo
because of the detailed demographic information it can provide to
advertisers -- even though people might be more familiar with the other
two brand names.

"The thing about search is that it's all about performance, not about
the brand name," Li said. "As long as it performs, people are going to
buy it."

Still, Li said that Microsoft and the companies who sell ads will have
to be subtle in their advertising, so people don't start to feel like
the advertising is so targeted that Big Brother must be watching.

"You can't bang people over the head," she said.

Microsoft has admitted that it originally missed the boat on the hot
field of Internet search, preferring instead to outsource the job to
others. The company, whose search engine is the third most popular
after Google's and Yahoo's, is now rushing to catch up.

Copyright 2006 The Associated Press.

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