Microsoft's ad pitch underpins Net moves

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But analysts have wondered whether Microsoft will take the notion far enough. Add-ons such as Windows Live and Office Live are one thing, but some have questioned whether it's a good idea for Microsoft to also prepare ad-supported versions of existing software.

"To us, it is clear that Microsoft understands the need for software as a service using AdCenter for monetization. But how quickly the company can respond is unclear, and how far it is prepared to drive this approach is also unclear," Goldman Sachs analyst Rick Sherlund said in a report earlier this week.

On the marketing front, Bradford says the next step is making the ads more palatable to the consumers that are viewing them. All of this ad-supported stuff won't work if people feel overwhelmed.

"Right now, we're just firehosing everybody."

--Joanne Bradford, chief media revenue officer, Microsoft

"We don't want people to 'put up' with the ads," Bradford said. Instead, the goal is that the ads are so targeted that people see the ads as a relevant part of what they are doing. "We don't want anybody to feel bad about the ads they are getting. Today sometimes you do," she said.

Today's search ads make no distinction of who is doing the searching. "Right now, we're just firehosing everybody," Bradford said. She pointed to how much more useful it might be for a cell phone carrier, say, to know who is searching for "cell phone." If the person is in their 20s, a ringtone ad might be a good idea, while for a 40-year-old, a pitch for a new rate plan might be a better bet.

Winfield said that Microsoft's demographic abilities are far from perfect, but says even information that is 25 percent accurate is useful.

"I'd still rather that, than the zero percent Google is giving," he said.

The added feature would not be enough for Whitfield to switch all his marketing dollars away, however. "That doesn't mean I am going to stop advertising on Google or Yahoo. They have the ad reach," he said.

Personalization or privacy invasion?
Yahoo, for its part, has some targeted options when it comes to display and banner advertising, but a representative said the company is still weighing the privacy concerns of offering something similar to what Microsoft is doing.

"Audience intelligence may be something that's of value to our advertisers, and we're testing a number of ways to look into that," the Yahoo representative said.

Google said it is sticking with its approach of targeting its ads based on the context of the search query, rather than using demographic information of the person doing the searching.

"We believe the targeting capabilities we offer today provide advertisers with the greatest return and result in the highest quality user experience," Google spokesman Michael Mayzel said.

Although rivalry with Google is often cited as the main impetus behind Microsoft's ad push, Yahoo is the most likely to feel the first impact from Microsoft's AdCenter. Yahoo currently supplies most of the keyword-related search ads to Microsoft's MSN Web portal under a deal that runs through next June.

Microsoft has said its goal with the current trial of AdCenter is to generate up to a quarter of those MSN results using its own tool, and it expects to reach that capacity soon, Bradford said. "We have a long line of people that want to get in the pilot," Bradford said.

Yahoo, for its part, has seen the writing on the wall. The company is looking to areas outside its MSN relationship, such as an expansion of its Yahoo Publisher Network program, in which it delivers self-serve ads to small and mid-size publishers. That program, a rival to Google's AdSense, has been in limited beta testing since August.

"We see significant growth opportunities next year regardless of any particular relationships," the Yahoo representative said.

Bradford, meanwhile, is looking beyond search. The next goal for AdCenter will be to serve up display ads for Windows Live and Office Live. From there, Microsoft has its eyes set on sending ads to mobile devices and Xboxes.

"It's not just about in your PC with your browser open," Bradford said.

[Earl Benser]

And the crucial question is....

.... how does the average user turn it off??? or delete it??? or
whatever???

[PurePacket]

You don't

Things that are ad-based are that way because you aren't paying for the software. The option to turn them off requires you to actually pay for the software, that's how it works with everything ad-based.

Opera, before it was free, had google ads across the top. Google ads are very nice to have, especially always on like that. They are context based so you could see a link to something related to what you are reading, that you otherwise might never see. The internet is huge, ads like these help bring it to you. If Microsoft can manage to get this working right, it will be a useful tool, not an annoyance. Plus it means you don't have to drop $500 on Office.

[timgreenwalton]

AD shmads

I use google and MSN all the me but I have never clicked on an AD ever!!! Do the adverizers no that this ad stuff does not work?

[PurePacket]

If it didn't work...

Then Google wouldn't be making over $4 billion a year from their ads alone. Maybe you should reread the article, it DOES work. Google ads are great.

I might be wrong

But wasnt the Dot com crash having partly to do with advertisers pulling out of free services that were supported by ads? Im just recalling back when i used to do web pages for gaming as a hobby for a group that played online games, and i remember alot of great free web hosting service's closed out their free ad supported service due to advertiser's claiming loss in revenue, same could be said about alot of the free email and messageboard services that were around also.

And well while ad supported software is nothing new, i developed a distrust in alot of them due to some companies using spyware, so im very leary towards that kind of stuff - free is nice but not to me if it comes at a cost of losing privacy and having problems with your machine.

[gundeephora]

So Wrong

It's funny how some of you don't have a clue about the world of advertising and brand recognization. Advertising is a critical part of sending across a message to a specific audience. If advertising didn't work, as one of you pointed out, then Dell, Intel, Sony etc. wouldn't be where they are today. It's because of advertising that the world recognizes these companies are technology leaders.

Yes, advertising is helpful. How would you find the next best MP3 player or digital camera without seeing an advert. for it? That's right, you wouldn't. Companies rely on advertising to generate sales and adverts. do work.

You do realize that advertising is a source of revenue for almost all media companies. If advertising dropped, pretty much all the media companies would die out and companies then would have no form of communication. So it's a catch-22 thing.


Bottom line: advertising will never ever die, nor would I want it to do because I like my news too much. Moreover, if more people start to block advertising, companies will find creative ways of surpassing that, and the battle between consumers and advert. agencies will continue.

So for those of you hoping to see the world without advertising one are in a disappointment of your life.

[t8]

Microsoft ads feel bad

An An ad supplied by Microsoft is the worst kind of ad. A Google ad gives me a warm fuzzy feeling.
The point is that if you do not like a company, it doesn't matter what they do, it always feels bad coming from them. We also know that a lot of people hate Microsoft for one reason or another and rightly so. But no one hates Google as they have done a lot for the Internet and big and small businesses alike. They have so far been a good force in the IT world.

The push for online services with the Web as the platform gives Google the advantage because the Web gives us choice and we choose who we like. Microsoft has been force feeding people on their stuff for years with Windows, but they cannot force feed anyone on the Web. As the saying goes, "you can lead a horse to water but you cannot make him drink". Traditionally people have only used Microsoft because they had to. On the Web that will not be the case.

That said the Justice Dept will have to keep an eye out for illegal business practices from Microsoft. Microsoft may resort to breaking the law again when they realise they cannot win by fair competition.