Microsoft Developing Web's Largest Advertising Network
Ad testing begins on Office Live, Windows Live Mail and MSN Spaces. — REDMOND, Wash. — March 15, 2006 — Microsoft Corp. today announced it has begun testing display advertisements across Microsoft® Office Live, Windows Live™ Mail and MSN® Spaces.
Context & Ripple Effects
Microsoft had already outlined a planned search-ad system in January 2006. Testing display placements across its Live and MSN properties extends that advertising push from search into services where Microsoft controls the audience and page inventory.
The move also fits Microsoft's stated effort to build a personalized online-services ecosystem rather than a closed destination. Advertising becomes a way to fund and connect those consumer services.
First-order effects
- Microsoft begins testing display-ad inventory in Office Live, Windows Live Mail and MSN Spaces, making the experience of those services directly relevant to advertisers as well as users.
- The three services gain a shared commercial purpose: their traffic can be evaluated as inventory for a broader Microsoft advertising operation.
Second-order effects
- Microsoft's planned search-ad system and its display tests create pressure to connect advertiser demand across search and Live/MSN properties, rather than sell each service as a separate media buy.
- MSN Spaces and Windows Live Mail teams face a product trade-off between adding monetizable placements and preserving the user experience that supplies the audience.
Third-order effects
- If Microsoft can combine search intent with audiences across its online services, competition among Google, Microsoft and Yahoo shifts toward owning both advertising tools and the consumer services that generate inventory.
- The larger structural change is an internet-services model in which email, publishing and small-business tools are assessed not only as software offerings but as parts of an advertising network.
The trend: Microsoft is building an advertising business around an interconnected set of consumer web services, pairing search marketing with display inventory it controls.