With Yahoo! Deal Uncertain, Microsoft Tries to Show Off Advertising Prowess

It may be an also-ran in the online ad business that made Google its billions, but Microsoft is intent on proving that it can play in this market after all. And at a special event this week at its Redmond campus, the software did just that, showing off its recent investments in Web, mobile, and gaming advertisements. Microsoft claims it now offers a "one-stop shop" for advertisers, with a compelling mix of offerings that is unrivaled by the competition.

"Microsoft Advertising is the new brand identity we have chosen to unify all of the tools and solutions we offer advertisers, agencies and publishers," says Microsoft senior vice president of advertiser and publisher solutions Brian McAndrews. "It's designed to let customers know that we're committed to making sense out of a complex environment, and that we have everything they need, all under one roof."

At the advance08 Advertising Leadership Forum this week in Redmond, Microsoft offered up evidence of its advertising work over the past year. New and upcoming advertising-related offerings from the software giant include:

Engagement mapping service. This service gives advertisers insight into consumers' online buying habits by providing more information than just which ad was clicked.

Mobile advertising. Microsoft is working on "rich media ads" that will target current- and next-generation smart phones. These ads will typically be delivered via mobile Web sites, but the company also showed off ads displayed via its Windows Live Messenger and Windows Live Homtail clients. Additional, Microsoft showed a prototype advertising system aimed at the Zune portable media player.

In-game advertising. While video games have long featured product placement similar to that used in the TV industry, Microsoft is working with advertisers on integrating game player experiences with advertising in ways that won't annoying gamers. The company pointed to a recent contest in which it asked developers to create a Doritos-themed game. It received thousands of entries.

Additionally, Microsoft hopes to jumpstart its lagging Live Search by paying people to use the service. This isn't the first time the company has tried such a tack, as it launched a similar program three years ago. Now, users who make purchases by using Live Search to find certain products--in the US only, sorry--will receive a small refund as part of a new program called Live Search Cashback. Microsoft is using technology acquired with the purchase of Jellyfish.com last year to power this program.

What Microsoft didn't mention explicitly at its advance08 confab was Yahoo!, though it's not hard to imagine that the suddenly reignited talks with the struggling Internet giant hung like a dark cloud over the proceedings. Microsoft CEO Steve Ballmer, who has been traveling this week, said from Israel that the recent talks with Yahoo! are quite different from his original takeover bid. "We are not bidding to buy Yahoo!," he said. "We are trying to have discussions about deals with Yahoo! that might create value, but not a whole acquisition of the company."

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