• by Ross Fadner , November 18, 2004

MSN Thursday extended for one year its partnership with sponsored-search listings provider Overture Services, a Yahoo! subsidiary. The agreement, which lasts through June 2006, calls for Overture to continue to provide sponsored-search results on MSN's sites in the United States and Canada, Europe, and Asia.

While such listings currently account for the vast majority of MSN Search revenue, MSN also sells directly to search marketers through its "MSN Search Featured Sites" program, which allows advertisers to purchase keywords for three listings at the top and bottom of the page.

Because marketers who purchase keywords through that program are guaranteed the highly coveted top three spots, Overture advertisers--who bid for placement on keywords relevant to their businesses--are left competing for the fourth most valuable spot on the page.

But, although those who buy directly from MSN might get valuable real estate, there's a trade-off: participation isn't cheap. MSN requires a one-year commitment and a minimum annual spend of $75,000.

Some marketers, especially smaller ones, view MSN's program as prohibitively expensive, said Joshua Stylman, managing partner of search marketing firm Reprise Media. What's more, the one-year commitment is problematic for marketers who want to be able to immediately adjust their spend based on results, said Stylman.

Some observers are speculating that Microsoft is getting ready to move beyond MSN Search Featured Sites and create its own ad-placement technology. Thursday's Wall Street Journal, citing "people familiar with the matter," reported that Microsoft might have a test of its own sponsored results system by next year.