Industries
Microsoft Launches Ad Network
With its own search-based ads, the software giant will challenge Google while phasing out ties to Yahoo.
Microsoft on Monday launched an online advertising network linked to searches through MSN, challenging Google in the lucrative paid search field.
The Redmond software giant introduced the service, known as adCenter, in France and Singapore on August 31 and said it will expand it internationally. Testing in the United States will begin during October. After establishing its own ad network, MSN also is expected to phase out its relationship with Yahoo, which now sells ads on MSN search.
Advertising linked to search has provided Google with the bulk of its revenue through its AdSense service. Microsoft’s move into the field accelerates the company’s battle against the search giant and follows on the heels of Microsoft’s announcement last week of a restructuring aimed at re-emphasizing the web (see Microsoft Revamps Structure).
“This is a move that Microsoft had to make given the strength of Google in this market,” said Jonathan Spira, chief analyst of Basex, an IT research firm focusing on knowledge sharing and collaboration. “It’s interesting or perhaps deliberate that this follows Microsoft’s reorganization, where MSN ended up in the same group as the Windows OS."
‘This... gives Microsoft the ability to control its own destiny.’ -Jonathan Spira, Basex
Microsoft shares were up $0.17 to $25.44 in recent trading.
“The launch of adCenter in France and Singapore is a great first step to delivering on our global vision to connect advertisers to consumers in a much more meaningful way,” said Yusuf Mehdi, senior vice president of the MSN Information Services & Merchant Platform.
Microsoft would eventually like to begin selling ads on web sites in addition to MSN through the network it is building.
Slice of the Pie
However, the company will face challengers in building a network to rival Google’s, which has been providing thousands of small web sites with much of their revenue. Microsoft would like a slice of that business, as well as relationships with these small web sites to which it could sell software.
“The possibilities of that tie-in are endless if one contemplates the possibility of software and tools delivered over the Internet and paid for by online adverts,” said Mr. Spira. “This also gives Microsoft the ability to control its own destiny and eliminate the service that Yahoo is providing selling the ads.”
For assistance with this goal, Microsoft enlisted the expertise of web-advertising technology firm DoubleClick to create the service.
“adCenter is helping us apply more flexibility and control in our paid-search advertising campaigns because it gives us the tools to learn so much more about the kind of people who are searching on MSN,” said Stuart Larkin, vice president of Search for Performics, a division of DoubleClick.
Microsoft will initially run adCenter in tandem with the Yahoo system it has been using for MSN searches, but The New York Times reported that Microsoft expects to replace the Yahoo system completely by next spring.
Demographic Watcher
Unlike Google’s system, Microsoft’s adCenter will target web users according to their demographic statistics. Microsoft was able to compile such information from people who signed up for its Hotmail and Passport services.
adCenter will include campaign management tools and audience intelligence statistics. Keyword selection features will let advertisers indicate who they want to reach based on geographic location, gender, age range, time of day, and day of the week.
A site analyzer will suggest keywords to advertisers based on the content of their web site. An audience profiler gives advertisers an expected profile of customers who are likely to search for particular keywords.
A cost estimator will help advertisers budget for the cost by estimating the rank, traffic, and cost per month for a keyword. Campaign optimization features let advertisers refine their budget allocations and keywords, and apply filters for geographic locations and demographic information.
The software also offers post-sales audience intelligence and reporting information so advertisers can learn about the performance of their campaign and the audience they reached. The data includes the click-through rates, estimated positioning, and spending levels.
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Microsoft announced today the official launch of MSN '''adCenter''' in France and Singapore. '''adCenter''' allows advertisers to target specific demographics using information provided by Microsoft's Hotmail and Microsoft Passport Network users.

"The launch of adCenter in France and Singapore is a great first step to delivering on our global vision to connect advertisers to consumers in a much more meaningful way," said Yusuf Mehdi, senior V.P. of MSN Information Services & Merchant Platform.

Advertisers will be able to target ads based on geographic location, gender, age range, time of day, and day of the week. If MSN has no information on the visitor it will display ads based upon keywords. Additional features include a cost estimator and a site analyzer that will recommend keywords based on the content of the advertiser’s website.

MSN currently has a contract for Yahoo ads that runs through 2006, and they are expected to slowly phase them out, although MSN has not confirmed this.  

'''adCenter''' has been in testing in France and Singapore since March. Testing in the US will begin in October. Microsoft plans to eventually sell ads on websites outside of MSN.

This initiative is a part of a broader strategy that Microsoft has launched to compete against Google's AdWords service, in operation for several years, which allows advertisers to bid on specific keywords and ensure ad placement on the company's search engine and other online properties. Microsoft's chief executive vowed to "kill Google" in an expletive-laden tirade against the firm, according to US court documents filed by Google.

Many internet users choose to block web page advertisements from both Microsoft and Google, using several different techniques of ad filtering, such as adblock in the firefox web browser.