Microsoft Corp will start selling text-based advertising that will be displayed alongside search results on its new search engine, the world's largest software maker said on Tuesday. Microsoft's plans to launch its own online advertising service comes a month after the software giant released its own search engine, setting the stage for a three-way face off with Yahoo Inc and Google Inc, which have built lucrative businesses by providing paid search advertising for their respective high-traffic search engines.
Microsoft currently uses Yahoo's Overture Services Inc unit to sign up advertisers, who pay money to have text ads and Web links displayed along the top and sides of search result listings.
Microsoft, following on its decision to build its own search engine to replace Inktomi, a search engine owned by Yahoo, will now build a new, comprehensive online advertising system called MSN adCenter, said Yusuf Mehdi, vice president in charge of content and services at Microsoft's MSN Internet division.
"It's our next-generation global online advertising platform," Mehdi said, adding that the advertising system will eventually be expanded to provide branded advertising campaigns, e-mail advertising and other online online ads for people using computers as well as mobile devices.
For now, however, Microsoft said it would run a pilot of its paid-search advertising system in France and Singapore for six months before expanding its online ad services further.
Microsoft's chief executive Steve Ballmer will detail the new advertising system at an MSN advertising summit at the company's Redmond, Washington headquarters on Wednesday.
Among the attendees expected at the summit are Eric Schmidt, chief executive officer of Google, Barry Diller, CEO of IAC/InterActive Corp and Ted Meisel, president of Overture.
Microsoft's emphasis on search and online ads comes as its MSN division becomes more dependent on advertising revenue to fuel profits. MSN was originally launched 10 years ago to provide Internet access services, but has since shifted its focus along with changing Internet trends. "Advertising is how we will drive revenue and profits for MSN," Mehdi said. MSN has posted an operating profit in three of the last four quarters.
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