• by Gavin O'Malley  @mp_gavin, September 21, 2011

Adchemy has raised $61 million in Series E funding from Microsoft, August Capital and the Mayfield Fund, the online marketing service and pay-per-click authority said Wednesday.

As part of this latest round -- which brings Adchemy's total funding to $120 million -- Microsoft has renewed a partnership with Adchemy to offer the ad technology to its Microsoft adCenter customers.

According to Rik van der Kooi, corporate vice president of the Microsoft Advertising Business Group, the key to success is "a deeper understanding of consumer intent so that the ads users see are engaging and relevant."

"Expanding our relationship with Adchemy brings us closer to this vision," van der Kooi said Wednesday.

Per the deal, Microsoft and Adchemy hope to expand the use of the Adchemy IntentMap technology -- which aggregates signals across search, social media, display, behavioral, local and other media -- among Microsoft adCenter customers.

Launched in 2005, Adchemy has recently sought to commercialize its IntentMap technology for paid search by offering advertisers an alternative to existing paid-search services and tools. Essentially, IntentMap allows disparate media-buying teams to analyze various "intent" signals that would otherwise remain siloed.

Prior to completing the Series E investment round -- in which Microsoft will take a minority stake in Adchemy -- the two companies completed the initial phase of a program focused on improving paid-search campaigns for select online retailers, including Macy's and O.co, also known as Overstock.com.

In addition to AdCenter, Adchemy's technology will also be integrated into Microsoft's Bing search engine.

By most reports, Microsoft is increasingly desperate to improve both units. First, two-year-old Bing is reportedly losing nearly $1 billion a quarter, while Microsoft has lost $5.5 billion on Bing since the search service launched in June 2009.

Worse yet, the software giant has never made money in its online services division. Since Microsoft began breaking out that unit's finances in 2007, the company has lost a total of $9 billion.