Microsoft Corp will begin testing a service in the next six months in France and Singapore in which clients pay to be listed alongside its MSN search results in a bid to boost revenue from Internet advertising sales.
The service, part of the new MSN adCenter, was to be demonstrated yesterday during Microsoft Chief Executive Steve Ballmer's speech to ad customers, MSN Vice President Yusuf Mehdi said in an interview on Tuesday. Mehdi declined to say when the tests will be expanded or when a final version will be available.
The service will put MSN in competition for ad dollars with similar products from No. 1 US search engine Google Inc and No. 2 Yahoo! Inc.
Redmond, Washington-based Microsoft, the world's largest software maker, got more than US$1 billion in sales last year from Internet ads. The market for Internet search-related ads is now worth about US$6 billion and will double by 2008, Mehdi said.
"It's going to be a no-brainer that people are going to sign up for this service," said Danny Sullivan, editor of SearchEngineWatch.com, a JupiterMedia Corp Web site that tracks the industry.
"MSN has a sizable amount of search traffic, so people will sign up for that in addition to Google and Yahoo," he said.
The service may help Microsoft boost ad revenue at its MSN Internet unit and revive sales growth. Microsoft's revenue will rise 8 percent this fiscal year, the slowest pace ever, after an average of 38 percent growth in the 1990s.
The services all auction off keywords so that when a user enters that word into the search engine the ad appears alongside results of the search.
MSN, the No. 3 US search engine, hopes to hook advertisers with extra tools that will help them select which keywords work best at luring target customers. For example, the list of available keywords for a certain product will show which ones work better with men or women and specific age groups and income levels, Mehdi said.
Advertisers will be able to purchase keywords for use only at certain times of the day or on weekends, he said, in order to target a specific group. After an ad campaign has ended, MSN, which has been working on this service since October 2003, will provide customers data on the types of people who clicked on ads.
Trying to catch market leader Google, Microsoft last month released its first search engine built from scratch. Microsoft still uses Yahoo's Overture, renamed Yahoo Search Marketing Solutions on March 1, to supply ads that appear alongside results.
Online ads make up only 4 percent or 5 percent of total spending on advertising, Mehdi said. That should increase to 10 percent to 15 percent in the next few years, he said. Spending on online ads will increase to US$20 billion to US$25 billion by 2008 from about half that now, he said.
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