• by Mark Walsh  @markfwal, November 24, 2009

Earlier this month, Microsoft quietly launched a new mobile ad program that runs display ads on its own properties that show sponsored links from Bing, based on a specific theme or set of keywords. The first category launched under the Marketplaces for Mobile initiative (not to be confused with its Windows Marketplace for Mobile app storefront) was ringtones.

Microsoft is following up that effort by launching new marketplaces for areas including holiday shopping, mobile games and wallpapers, and plans to expand into additional product verticals in the coming months. The company touts the concept as a happy marriage of search and display advertising for mobile devices.

"In effect, the Mobile Marketplace acts as a transformational mobile ad product, converting a generally reactive medium like mobile display into a more intent-based mobile search product," wrote Jamie Wells, director for global trade marketing, mobile media at Microsoft, on the company advertising blog Monday.

It also provides another way for Microsoft to promote Bing, its nascent search engine -- which has gained a nearly 10% market share of U.S. search only five months after being launched, according to comScore. Microsoft also introduced a mobile version of Bing, updated in October to be more user-friendly on touchscreen devices.

The software giant says Marketplaces is already showing strong results, with average click-through rates on sponsored links exceeding 20% -- five times higher than the average rate for a mobile search campaign. The ads appear as standard banners on mobile sites such as Mobile MSN, Hotmail, Messenger, CNBC or Fox Sports. Clicking on them redirects a user to a landing page listing Bing search results for one of the program categories.

Advertisers participate by setting up a Bing for Mobile ad campaign and bidding on placement in results for each product marketplace. So far, the handful of advertisers in the ringtone marketplace have not gone beyond a single page of results. But as the program expands, Wells said in an interview, Microsoft will have to decide whether to extend sponsored links beyond one page or display only the highest-ranking results.

The holiday shopping-themed marketplace, offering a wider variety of products, is set to launch in a matter of days, according to Wells.