Microsoft's MSN Joins Keyword Auction FrayMicrosoft's MSN Joins Keyword Auction Fray

Microsoft on Wednesday is expected to detail plans for MSN adCenter, a new online advertising platform. Its first component, a prototype "paid-search solution," marks the software company's entrance into the keyword advertising market dominated by Google and Yahoo.

"The vision for adCenter is to provide an easy-to-buy, one-stop shop for advertisers," says Karen Redetzki, product manager at MSN. "What we want to offer is for advertisers to be able to manage all their campaigns with one tool in one place."

MSN's paid-search approach will provide keyword buyers with information about the online audience—including geographic location, gender, age group, lifestyle segment, and time of day—to better target ad delivery. Microsoft CEO Steve Ballmer will lay out the company's plans at the sixth annual MSN Strategic Account Summit in Redmond, Wash.

In the United States and several other markets, MSN already offers a Featured Sites program that lets advertisers buy top placement on a search results page in a Sponsored Links box. Ads on the right-hand side of the search results page are delivered by Yahoo Search Marketing Solutions, formerly Overture Services Inc.

In the near term, MSN's relationship with Yahoo isn't likely to change. Wednesday's announcement "is all about our intent to pilot and test this thing," says Redetzki, adding, "It's business as usual" with Yahoo.

In June 2006, that could change. That's when MSN's contract with Yahoo for keyword advertising expires. In the interim, Microsoft on Wednesday is expected to detail plans for MSN adCenter, a new online advertising platform. Its first component, a prototype "paid-search solution," marks the software company's entrance into the keyword advertising market dominated by Google and Yahoo.

"The vision for adCenter is to provide an easy-to-buy, one-stop shop for advertisers," says Karen Redetzki, product manager at MSN. "What we want to offer is for advertisers to be able to manage all their campaigns with one tool in one place."

MSN's paid-search approach will provide keyword buyers with information about the online audience--including geographic location, gender, age group, lifestyle segment, and time of day--to better target ad delivery. Microsoft CEO Steve Ballmer will lay out the company's plans at the sixth annual MSN Strategic Account Summit in Redmond, Wash.

In the United States and several other markets, MSN already offers a Featured Sites program that lets advertisers buy top placement on a search results page in a Sponsored Links box. Ads on the right-hand side of the search results page are delivered by Yahoo Search Marketing Solutions, formerly Overture Services Inc.

In the near term, MSN's relationship with Yahoo isn't likely to change. Wednesday's announcement "is all about our intent to pilot and test this thing," says Redetzki, adding, "it's business as usual" with Yahoo.

In June 2006, that could change. That's when MSN's contract with Yahoo for keyword advertising expires. In the interim, MSN expects within six months to begin testing its own paid-search approach in Singapore and France.

Chris Winfield, president and co-founder of 10e20 LLC, a search-engine marketing firm, doesn't expect MSN's relationship with Yahoo to continue indefinitely. "The last thing in the world you want to do is support a major competitor," he says, pointing to how Yahoo weaned itself from Google's search results.

Winfield predicts Microsoft's move into the keyword advertising market will drive costs down for advertisers and spur innovation in what's becoming an increasingly competitive space.