• by March 16, 2005

Microsoft Corp.'s MSN today unveiled its new adCenter product, an online ad platform that puts MSN squarely in the paid search advertising business. MSN says adCenter will expand to offer brand campaigns and e-mail advertising, and eventually be delivered via mobile devices. MSN has depended on a relationship with Yahoo!'s Overture unit to attract advertisers that pay to have text ads and Web links displayed on search results pages. That relationship ends in June 2006, but MSN will continue to work with Overture until adCenter is up and running.

The launch of adCenter follows closely on the release of MSN's new search engine. Of course, MSN plans to sell text-based advertising on the new engine. Offering this service to advertisers will enable MSN to compete head-on with Google and Yahoo! Microsoft is offering a pilot of the new service in France and Singapore that will begin within the next six months.

There was no word on when the service will make its U.S. debut. "Up until now, search has been all about the click," says Eric Hadley, director of marketing for MSN. "It's not about the click, it's about making the connection to the customer. If the advertiser knows about who's clicking on what word when, they can make a smarter buy."

Hadley says MSN adCenter will enable advertisers to customize their buys based on audience demographics such as gender, age, and interests. Microsoft generates some $1.5 billion annually from Internet advertising. The company doesn't break out how much of that revenue is derived from paid searches on MSN.

MSN also says it's expanding its custom solutions group, though there are no announcements on key hires. Headed by Gayle Troberman, director of MSN Branded Solutions, this group of nearly a dozen folks has created some interesting online programs for American Express, Visa, and other big brands. Even more importantly, the online programs synced with the companies' offline marketing initiatives and integrated MSN Video and other key assets.

The group has worked with nearly 50 top advertisers. MSN's latest custom program with Sprite, launches on March 22. Hadley says there are plans to "double" the resources for custom solutions as MSN eyes growing opportunities in the branded entertainment sphere and a chance to leverage its Hotmail, Messenger, and Music properties more fully.

The unveiling of adCenter and other news comes as MSN kicks off its sixth annual Strategic Account Summit at its Redmond, Wash. headquarters. Reporters were invited to the summit last year, but not this time. Hmm.

Some 500 major marketers, MSN technology partners, and agency executives will hear from an all-star lineup at the two-day event. In addition to Microsoft CEO Steve Ballmer and other executives, attendees will hear from Barry Diller, CEO of InterActive Corp.; Eric Schmidt, CEO-Chairman of Google; Ted Meisel, president of Yahoo!'s Overture division; Mitch Kanner from Two Degrees; Nigel Morris from Carat Europe; Mark Burnett, producer of "The Apprentice" and other reality TV series; and Ann Fudge, chairman-CEO of Y&R Advertising. Fudge, who is under mounting pressure to fix beleaguered Y&R, will speak about how a traditional agency embraces online advertising and marketing. We surely would have liked to hear her speak on that topic.

Of MSN adCenter, Frederick Marckini, CEO of iProspect, says: "The targeting opportunities that MSN has described are powerful and are likely to help advertisers improve their results. For the first time, advertisers will be able to see the quality of the traffic coming to MSN."

Marckini says that having the ability to evaluate the quality of the traffic on MSN will put pressure on MSN to grow its volume and to ensure that the traffic "is as good as Yahoo! and Google. There's no reason to think it's not, but advertisers will be able to choose whether they want to participate with MSN." If MSN succeeds in growing its volume, the question, Marckini adds, is how will it perform relative to Yahoo! and Google? "All the data suggests it will perform as well, if not better because of the increased targeting tools," he notes.