Analyst: Microsoft training users to see banners on mobile Web

By Giselle Tsirulnik

December 11, 2007

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Microsoft Corp.'s decision to start selling ad space on the U.S. version of MSN Mobile begs a question: Is it playing catch-up or sprinting ahead in a familiar three-cornered contest with Google Inc. and Yahoo Inc.?

Viacom Inc.'s Paramount Pictures, Ford Motor Co.'s Jaguar car brand and Bank of America Corp. are the first brands to buy mobile ad space from Microsoft. Microsoft already serves mobile ads in Japan and some European markets such as Britain, Belgium, France and Spain.

"MSN is struggling really hard to keep up with Google and Yahoo," said John du Pre Gauntt, Louisville, KY-based senior analyst for digital marketing research publisher eMarketer. "It's like a ten-slice pizza pie. Google takes up nine of the slices and everyone is trying to split the last piece.

"Microsoft needs to compete either with technology or integration," he said. "It's not going to match Google with volume. Expect to see a lot of sweetheart deals. It's good if you have an experimental budget."

Users of MSN Mobile will now see small graphics or text ads when using the mobile Internet.

MSN Mobile is a Web portal for mobile phone browsers that connects users with Hotmail, instant messaging, search, news and other content.

Industry observers have all been expecting this news as Microsoft bolsters its online and mobile credentials.

This past year, the Redmond, WA-based software giant bought online advertising services company aQuantive Inc. for $6 billion and mobile ad group ScreenTonic SA for an undisclosed amount.

"Microsoft is exposing consumers to the fact that mobile Internet is slowly going to become what the online Web is like," Mr. Gauntt said.

"Microsoft wants people accustomed to seeing banner ads on their phones," he said. "Banner ads are a natural progression to get that same look-and-feel."

Microsoft is not letting its advertisers target ads based on location or Web-surfing behavior.

Mr. Gauntt thinks that Microsoft currently just wants mobile phone users to become used to seeing banner ads on the mobile Web, but expects the company to offer targeted techniques in the future.

"Microsoft is planting a stake in the grass," Mr. Gauntt said.