Microsoft's Entry Sure to Stir Things Up in Search Ad Space

Microsoft (Nasdaq: MSFT) has begun testing display advertising across its Web Services network, which includes Microsoft Office Live, Windows Live Mail and MSN Spaces. The initial ad purchases by Coca-Cola Brazil, JCPenney and Monster Worldwide are sure to touch off a heated battle between Google (Nasdaq: GOOG) and, to a lesser extent, Yahoo (Nasdaq: YHOO) .

Google, of course, developed the paid search market, further refining it over the last few years with the launch of new services such as AdSense. Although it has been challenged by Yahoo and a handful of second- and third-tier networks, Google just about rules this space.

For this reason, Microsoft's entrance will make marketers happy, according to Greg Sterling, a search engine analyst for the Kelsey Group.

Fear and Skepticism

"Publishers and marketers have come to regard Google with a certain amount of skepticism and fear," he told TechNewsWorld. "They don't want a single dominant player. Like any other business, they would like competition."

Not that Microsoft will siphon a vast amount of traffic away from Google. What is likely to happen, Sterling speculates, is that marketers that want some diversity will use Microsoft Live. Companies that just want to make one media buy, though, will stick with Google.

"It will be a challenge for Microsoft to match the breadth and scope of the Google network," he said. However, if Microsoft is able to develop a good quality network of its own, it is likely to gain serious traction.

Altogether, there are 20 global marketers participating in the initial ad tests, according to Microsoft. The results of these initial buys will be used to determine which ad offerings provide the best return on investment for marketers.

Global Audience

Microsoft is leveraging its global reach as one way to establish and differentiate itself.

"An increasing number of advertisers are becoming more global," noted Joanne Bradford, corporate vice president for Global Sales and Marketing at Microsoft. "With ad-supported software opportunities, we're able to offer great services at low or no cost for our consumers, and a vast ecosystem for advertisers."

Windows Live display ads are currently being tested in MSN Spaces in Australia and Italy. Windows Live Mail display ads are being tested in Australia, Brazil, Canada, China, France, Germany, Italy, Spain, the United Kingdom and the United States.

Office Live display ads are initially being tested in the U.S. Microsoft immediately sold out of its available openings for beta advertisers.