It took Microsoft
Young adults have always been a prized demographic group for advertisers. Between big-ticket purchases like their first car and lifetime calls like their first credit card, sponsors angling for discretionary income like to bag customers while they're still young.
Facebook.com is the perfect catch for Microsoft. Unlike conventional social-networking and photo-sharing sites like MySpace.com or CNET's
Facebook isn't alone. Webshots recently launched its College Live site, which requires members to sign in with their .edu email address. However, Facebook is the sole player that defines this niche; it's even bordering on verb status. Microsoft is blessed to have landed a significant partner.
If at first you don't succeed, knock on new doors
For a while there, it didn't seem like Microsoft would get its foot into the contextual-marketing door, beyond its own collection of popular Web destinations. It went after America Online, but was rebuffed when Google
This left Microsoft with a pretty grim playing field. It has been slow in launching its new online advertising service, making it a hard pitch to potential third-party publishers, especially as its more established rivals called dibs on all the worthy dot-com properties.
Landing Facebook, in part, helps legitimize Microsoft's nascent adCenter. Sponsors will come, and other popular content sites will answer Microsoft's call.
The more aggressive approach
Microsoft may be at a disadvantage to Google and Yahoo! by being late to the paid-search game, but it does have a monetary advantage. All three companies have drop-dead gorgeous balance sheets, but whereas Google and Yahoo! have billions of dollars in the bank, Microsoft has tens of billions of greenbacks to fall back on.
Even after the company's aggressive buybacks and generous dividend distributions, Microsoft remains a cash pinata. If it's serious about building up its adCenter business, its best move may be to buy popular content sites outright.
Media giants have been the biggest nibblers, scarfing down stand-alone hotbeds like iVillage, MySpace, and Atom Entertainment. The portals have been surprisingly absent, for the most part, from the content-site buying sprees. Most of Google's buys have been upstart technology companies. Microsoft is in a position to change that, and with a few choice purchases, it could jack the bronze-medal podium a little higher.
Companies like YouTube, Digg, or Craigslist are probably not interested in selling out, but one can imagine that public companies like CNET or The Knot
Sooner or later, Microsoft will realize that if it can't make enough friends online, it will have to pay guests to attend its party. Facebook? Nice catch. Now go out and do what most of the Facebook faithful do: try to land the company of someone new.
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Longtime Fool contributor Rick Munarriz would put himself up for sale if he were a website instead of a person. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.