By finding a more precise way to target an audience, Microsoft becomes a serious challenge to Yahoo and Google, the leading suppliers of the ads alongside Internet search results, a Microsoft analyst believes.
On Monday, Microsoft Corp. said its on track for an October U.S. debut for adCenter, a process advertisers in Singapore and France now use to place ads on a variety of MSN divisions offerings, and just about any other kind of Web site.
In theory, the more refined the audience choice, the more successful the marketing.
In this regard, Microsofts relatively new adCenter has an edge over competitive offerings by market leader Google Inc. and number two Yahoo Inc., analysts agree.
Microsofts adCenter lets advertisers target an audience based on age, gender and location. Google and Yahoo cant define a target audience as precisely, said Directions On Microsoft analyst Matt Rosoff.
"This makes them a solid number three player," and leapfrogs the search engine Ask Jeeves, which is at work on something similar to adCenter, Rosoff said.
Microsoft, Yahoo, Google, Ask Jeeves and others are all vying for a share of the overall online advertising spending market, which according to Microsofts figures will double by 2008 to $30 billion a year.
A growing number of companies like Microsoft hope to cash in by building their own technology to support and dispense all those ads, and offer its use to all-comers.
Because of adCenter, Yahoo will likely feel some financial pain relatively soon. It has a profit sharing arrangement with MSN to do the same thing as adCenter.
The Yahoo/Microsoft agreement expires in June 2006. It is Rosoffs understanding that this means "Yahoo is out" at that time.
Google is the No. 1 distributor of ads alongside Internet search results, by a large percentage. Representative for both companies had no immediate comment.