• by Mark Walsh  @markfwal, December 10, 2007

MSN Mobile will begin running display ads throughout the mobile portal, and named Paramount Pictures and Jaguar as the charter advertisers on the site beginning today, Dec. 10.

The display ads will include banner and text placements that will appear on the MSN Mobile home page and its five channels--sports, news, entertainment, weather and money. The mobile ads will not include video formats, and will be sold on a CPM (or cost-per-impression) basis.

The move follows similar efforts by rival Web portals such as Yahoo, AOL and Google, which have already offered display advertising on their own mobile sites.

"For mobile services we have been very focused on delivering a great customer experience and wanted to wait until we felt that our services were ready," said a Microsoft spokesperson in relation to its launch of display advertising on MSN Mobile.

Like its online competitors, Microsoft has been taking more aggressive steps in the last year to build up its mobile business. In May, the software giant acquired ScreenTonic, a European mobile advertising company, whose technology is helping to power the new ad mobile ad system. Microsoft's push into mobile advertising was also fueled by its May acquisition of digital advertising firm aQuantive for $6 billion.

"This reflects how everyone is now taking mobile seriously and see it as a big opportunity and want to start serving mobile ads," said Greg Sterling, founding principal at Sterling Market Intelligence and senior analyst at Opus Research. Opus predicts that mobile advertising in Europe and North America will surpass $5 billion in 2012, up from about $107 million at the end of 2007.

Display advertising on cell phones to date has been slow to gain traction because most U.S. subscribers still use their phones primarily to talk rather than to surf the Web or access content. But recent findings by mobile research firm M:Metrics suggest that Fortune 100 marketers are beginning to migrate to mobile screens.

The largest share of mobile advertising so far has come from media companies promoting Web sites, TV shows, movies and books, according to M:Metrics. Ad categories such as autos, financial services, and travel--already prevalent online--are now going mobile too.

The Microsoft spokesperson said that while its mobile ad effort is starting with two launch advertisers, the company expects to add many more advertisers over time. In addition to display advertising, MSN Mobile will also offer new downloadable content, including the ability to buy movie tickets, ringtones and wallpapers, and a new astrology channel.