Ballmer: Microsoft R&D Spend To Reach $1.1 Billion

Microsoft CEO Steve Ballmer declared his company a "patient, determined, long-term participant" in the competition to claim advertisers on the Internet at Thursday's Strategic Account Summit in Redmond, where the software giant officially announced the launch of adCenter, its answer to search giant Google's AdWords search advertising network.

Although Ballmer didn't mention search market leader Google by name, the Microsoft chief indicated that the coming battle for advertisers would be long and intense. "We know folks would really like to see good, healthy, active competitive innovation in this area, and I want you to know that we are a patient, determined, long-term participant in everything that we do, and we are patient, long term, and committed to really having a more and more significant footprint in the advertising arena," Ballmer said.

Citing Microsoft's rising spending on research and development--a projected $1.1 billion in the 2007 financial year, up from $500 million in 2005--Ballmer said that Microsoft was committed to providing advertisers with access to consumers on the Internet. "We will invest as much in this online opportunity in R&D as any of the other major players," he said. "It is important for you to understand our deep commitment to absolutely providing you with the experiences that you need to bring audience and help give you platforms and tools to intersect with that audience."

After Ballmer's keynote, Stuart Frankel, senior vice president at DoubleClick, touted the final version of the adCenter product to the assembled advertisers. "We found that the tools within the adCenter suite are extensive. We're really encouraged by the results we've seen in our campaigns. We've higher conversion rates on MSN than the other search engines."

Frankel also appeared to take a shot at Google when discussing adCenter's application programming interface. "Not having to pay a fee to access the API certainly made it easy to integrate," he said--an apparent reference to the search giant's decision to begin charging for API access last month.

Yusuf Mehdi, Microsoft chief advertising strategist, also previewed upcoming Microsoft advertising products. After launching Redmond's answer to AdWords, Mehdi previewed the company's answer to AdSense--The MSN adCenter Contextual Network, which will enter a pilot phase in the summer, running contextual ads on MSN sites. Advertisers on the network will be able to target by keywords, specific sites, or audience segments--luxury car buyers, for example.

Mehdi also previewed three long-term Microsoft ad products. The first was a demographic predictor for Web sites, which allowed users to enter a URL or keyword, and then predicted what age and gender demographic would be interested in the topic. The other previews concerned interactive video: A "speed bump" ad, which displayed a 5-second spot in the time viewers were fast-forwarding past a 30-second spot, and a tool that allowed users to click on products that appeared on TV shows--Sarah Jessica Parker's outfit on "Sex in the City," for example--and get information about or purchase the product.

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