Microsoft's adCenter Contextual Search Advertising Program to Compete with Google Adsense - Adwords

January 13th 2006

MS adCenter

Microsoft has been working for over a year on an advertising program to compete with Google and Yahoo. On Friday, Microsoft demonstrated 15 of 40 prototypes during its adCenter Demo Fest at their headquarters in Redmond Washington.

The company announced that they are opening a laboratory in Beijing to develop new technologies. About 22 researchers in Beijing will work with at least 20 in Redmond in what they call the adCenter Incubation Lab (adLab). Eventually there could be as many as 50 scientists assigned to the project in Beijing.

Microsoft’s adCenter offers a range of distribution options including video hyperlink ads and mobile-based ads designed to be served up in search results. The advertiser picks some key words. When the user types these keywords in the MSN search, their ads will appear.

The contextual advertising program works similar to Google and Yahoo’s paid search program. When the advertiser picks the keywords, they also place bids for positioning in the search results. Advertisers will likely get a higher position in the search results if your bid is higher than the other competitors for that keyword. You only pay if the user clicks on your ad.

The researchers in Beijing will be working on other programs including barcode readers, social network mining and large-display ads. The goal is to learn a user’s traits and behaviors in an effort to serve more relevant ads and help advertisers increase profits.

Microsoft’s adCenter is available in Singapore and France. A beta test version is available here in the US and MS hopes to get all the bugs out for a June release. It will be an uphill battle for Microsoft. The company currently only serves about 14% of the searches worldwide.

Google is the largest search engine providing over half the searches in the world. According to Red Herring during December, Microsoft’s founder Bill Gates said on a show produced in India by New Delhi Television that his company might consider giving users free cash or software to use its search engine.

Right now Google is top-dog for online paid search advertising and experienced a 44% growth in their search advertising in 2005. Google has a larger share of advertisers because the company offers the most search results and thus the biggest opportunity for traffic.

Both Yahoo and Microsoft have been anxious for a bigger piece of this business. According to the Seattle Times Microsoft currently serves up ads provided by Yahoo in their search results.