Even though Microsoft (NASDAQ:MSFT) is still years behind Google (NASDAQ:GOOG) and Yahoo! (NASDAQ:YHOO) in paid search, the software giant is hoping to make up some of that ground in a hurry. Just months after launching its adCenter online advertising platform, Microsoft is following its more established rivals into contextual marketing on content pages too.
The evolutionary step was reported earlier this week in Jennifer Slegg's industry-tracking blog, pointing out how select advertisers were now being offered the opportunity to serve their text ads beyond the MSN.com search queries.
Like Yahoo! and Google, Microsoft will scour a page for keywords and then serve up relevant ads. The technology is a win-win. Microsoft is able to cash in on its content sites. Advertisers receive quality leads from additional sources.
Going by Yahoo! and Google, the technology can also be a win-win-win once the format opens up to accept third-party websites in exchange for a piece of the action. Google AdSense has been a major contributor to Google's top line. Yahoo! Publisher Network has had a slower rollout. Microsoft is unlikely to catch up to Google in the near term, but there is a golden opportunity here to challenge Yahoo! for the silver medal.
The catch is that publishers need to be convinced that Google rivals will produce better results. That won't be easy for Microsoft because it lacks the breadth of Google advertisers to serve up blocks of perfect ads. That will impact clickthrough rates for publishers even if Microsoft is somehow able to land higher cost-per-click rates.
Landing Facebook as a third-party publisher is a great start for Microsoft. Now it needs to offer up a compelling product that will make smaller publishers swap "Ads by Gooooogle" for "Ads by Microsoft" on their sites. It won't be easy, but lately few things have been easy for Microsoft.
Microsoft is a selection in the Inside Value newsletter service. Yahoo! is a Stock Advisor recommendation.
Longtime Fool contributor Rick Munarriz has participated in the AdSense and YPN programs and would probably kick the tires of MSN too. He does not own shares in any of the companies mentioned in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. T he Fool has a disclosure policy.
