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Why Nokia-Microsoft Search, adCenter Deal Makes $ For Advertisers

Smartphone-Nokia

Nokia CEO Stephen Elop knows exactly how to drive up sales for the ailing company. Some experts believe the partnership is not in either company's best interests, but I disagree. In fact, it puts Microsoft in a much stronger place in the mobile market and gives Nokia an in to support advertising and near field communications (NFC) services.  

Elop, who came from Microsoft, announced the deal Friday. Most might not agree now, but in time it will generate positive revenue, advertising and sales for both companies. Microsoft will get a boost in mobile ad sales, pulling Nokia's hardware stronger into the U.S. market where its presence seems weakest. If Nokia negotiated the partnership in its favor, an ad revenue share deal should bring in a bundle for the handset maker.

Along with support from Windows Phone 7, Nokia and Microsoft will collaborate on joint marketing initiatives. Bing will power Nokia's search services across Nokia devices and services, giving customers access to Bing's search capabilities. Microsoft's advertising serving platform, adCenter, will provide search advertising services. Nokia Maps becomes part of Microsoft's mapping features. It will integrate with Microsoft's Bing search engine and adCenter advertising platform to form a local search and advertising service.

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The most interesting part of the deal comes when considering Nokia's position in near field communications (NFC). Along with Nokia, Sony and Philips spinoff NXP Semiconductors co-founded the NFC Forum, which aims to make mobile devices more intuitive and easier to share data and information by touching or holding the phone within a few inches of the downloadable content. The technology, dubbed the mobile or the electronic wallet, has been used at MasterCard point-of-sale terminals, public transportation, and sports stadiums.

Aside from using NFC as an electronic payment system, Microsoft Advertising and other ad agencies will tap the technology for ad campaigns. Jeff Miles, director of mobile transactions worldwide at NXP Semiconductors, a Philips Semiconductors spinoff, once described NFC as a "shortcut between advertising and consumers" that will one day replace 2D barcodes. Based on consumer opt-in preferences, the chip can customize the browsing and advertising experience on the phone.

NFC technology can authenticate check-ins on platforms such as Facebook, Foursquare and other location-based services. Could NFC be used to automatically authenticate check-in on products making their way through the supply chain? I think an engineer would have to answer that question.

Microsoft has been involved with NFC technology for years -- but close ties to Nokia, a co-founder of the NFC Forum, make the deal that much sweeter and stronger to compete head-on with Google, which announced last year that it would make its latest version of the Android operating system compatible with NFC.

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