• by Shankar Gupta , March 16, 2005

MSN, which rolled out its own search engine earlier this year, will begin selling sponsored listings within the next six months, a company spokesman said yesterday. The new offering--to debut on a pilot basis in France and Singapore--will put MSN in head-on competition with search giant Google and Internet portal site Yahoo!.

Yusuf Mehdi, corporate vice president of the MSN Information Services and Merchant Platform Division, will demonstrate the product, dubbed adCenter, today at the company's Strategic Account Summit in Redmond.

AdCenter, much like Google's AdWords, will allow advertisers to bid on keywords on a price-per-click basis. "This is our entry into the pay-for-performance search area, and we believe our software will add a lot to this area," said Eric Hadley, MSN's director of advertising and marketing.

Currently, Yahoo!'s Overture provides sponsored listings for MSN, and is contracted to do so until June 2006. Hadley declined to comment about whether MSN would be done with the overseas testing by that date. "We still see [Overture] as a great partner. This announcement doesn't change that relationship at all," he said. "We haven't put any date on when it comes out of pilot, because we want to make sure it's right and it works and it meets customer needs."

Included in MSN's product, Hadley said, are tracking controls that MSN developed based on input from search engine marketing firms. "We've spent a lot of time with quite a few SEMs to get an idea of what they're looking for," Hadley said.

Specifically, MSN will offer marketers detailed information about viewers' genders, ages, the time of day they view pages, and their location. According to MSN Product Manager Karen Redetzki, that data is collected from personal information provided to MSN when users sign up for services like Hotmail and other .NET passport products. MSN employs a third-party credit reporting agency, Experian, to help it refine and present the data. Redetzki said that all the data is aggregated, and personal data is kept private in accordance with MSN's privacy policy.

iProspect CEO Fredrick Marckini said the work that MSN did with his company "raises the bar" for other search companies. "The targeting opportunities that they're making possible are very long-sighted," he added. Marckini said that MSN contacted iProspect for help developing the product.

The major challenge that adCenter faces, Marckini said, is to capture market share away from the current search giant, Google. But Microsoft has a history of bringing down market leaders, including its highly publicized seizure of the Web browser market from Netscape in the mid-1990s.

In the test markets, the paid search ads will appear only on MSN Search pages, and not on any MSN vertical sites--although, said Hadley, MSN might place paid listings on vertical sites in the future.

According to Marckini, the entrance of a new area for companies to bid on search keywords is a boon to search engine marketing firms.

You now have to raise and lower your bids in three advertising platforms," said Marckini. He added that the new targeting options add another level of intricacy to search strategy. "Doing this manually is becoming increasingly time-consuming and complicated," Marckini said. "The more complexity these ad networks incorporate into their systems, the more people will need search engine marketing companies with proprietary management technologies."

And that means more business for search marketers like iProspect and its competitors.

Earlier this week, reports that Yahoo! would heighten competition in the paid search market by releasing a competitor to Google's AdSense program prompted one Wall Street analyst to downgrade the company's investment rating from "above average" to "average."

AdSense focuses on publisher sites, allowing smaller, lesser-known Web sites to make money by serving ads provided by Google based on keywords in their sites' content.

AdWords, Overture, and MSN's new adCenter focus on sponsored links presented alongside natural search results, tied to the keywords that users enter in their search field.

Hadley said that MSN was considering creating a program similar to AdSense for small Web publishers, but not until the pilot of adCenter was complete. "It's not in the pilot we're rolling out, but it's something that we're definitely considering for the future," he said.