Microsoft Unveils Sweeping Mobile Advertising Effort

Bidding to grab an early share of the rapidly growing mobile advertising market, Microsoft on Tuesday announced a broad initiative to drive both display and search ads on mobile devices.

The software giant will immediately make available display advertising on its Windows Live for mobile platform and will soon roll out plans to serve advertising within its Live Search Mobile offering.

Microsoft announced the moves at its annual AdvanceO8 online advertising conference, which focused on mobile opportunities for the first time this year.

The Windows Live program will enable advertisers in several markets — including the U.S., the UK, Spain and France — to serve banner ads to users of the Windows Live Messenger and Hotmail services. Additional countries will be added later this month, Microsoft said, and the banner ads will comply with guidelines approved by the Mobile Marketing Association.

“In today’s connected world, the mobile device is emerging as a prime opportunity for advertisers to reach their audience,” said Brian Arbogast, corporate vice president of mobile services at Microsoft. “This announcement is evidence of our commitment to providing advertisers with further opportunities to connect and engage consumers throughout their digital day.”

End Around

Microsoft also will invite advertisers to test keyword campaigns through the Microsoft adCenter to reach mobile users. A beta test of that program, which represents the first opportunity to monetize mobile search, is already under way in the U.S. and will be expanded later this year.

The launches represent Microsoft’s efforts to build on its existing mobile ad offerings — ads are already served alongside some Hotmail pages sent to mobile devices — at a time when it may still be trying to land at least part of Yahoo, which has extensive products and services in the space itself.

Acquiring Yahoo would have quickly made Microsoft a market leader in the mobile space, thanks to that portal’s strong mobile Web platform, Action Engine CEO Scott Silk told the E-Commerce Times.

“Yahoo has been the hands-down portal winner for mobile innovation,” he said. “Combining its own Windows Mobile platform with what Yahoo does could help Microsoft fend off Google in the mobile space before Android can really get traction.”

Ironically, one of the keynote speakers at last year’s online ad conference — which Microsoft uses to highlight new marketing initiatives — was Yahoo CEO Terry Semel. At the time, reports linked the two in possible merger talks, though it was still months before Microsoft launched its since withdrawn hostile takeover bid.

Time on Its Side

Microsoft has already used acquisitions to enhance its mobile presence, most notably through the purchase of ScreenTonic in May 2007.

Separately, Microsoft unveiled a future ad program that will enable advertisers to use the media-sharing capabilities of its Zune player to reach consumers. Microsoft showed conference-goers a mock Doritos campaign that invited users to a social sharing page through their Zune players where the advertisers offered free music downloads and sponsored a music festival.

The example also included a sharing element and a game built around the Doritos campaign, and it echoed the types of multiple touch-point campaigns Microsoft already offers through its Xbox 360 platform.

A Valuable Market

Advertisers spent about US$2.7 billion on mobile marketing last year and will dish out $4.6 billion this year, according to research firm eMarketer. The space will be worth $19 billion by 2012, the group predicts.

Getting there will require extensive investment and changes that aren’t yet in the offing, Yankee Group analyst John Jackson told the E-Commerce Times.

The iPhone, along with a slew of devices from competitors that offer stronger Web interfaces and make mobile Internet navigation much easier, are helping advance the mobile ad space.

“It’s not going to happen overnight,” he said. “Lots of work remains to be done around the idea of the forms advertising will take on the mobile platforms and the best ways to reach consumers.”

Microsoft often uses conferences such as the Web advertising confab to demonstrate its technological prowess in emerging areas, Jackson added. “Microsoft does have a lot of tools and platforms it can reach users, on and the question now is whether it can generate the scale to convince advertisers it is the place to be.”