Microsoft's paid
search platform will provide detailed -- but not personally
identifiable -- information, such as gender, age and location,
for many people who use its search engine, allowing advertisers
to target their ads to a specific audience.
Following the
lead of Google Latest News about Google and other
online competitors, MicrosoftRelevant Products/Services
from Microsoft plans to start selling sponsored links
on its search Web pages.
Microsoft's move
into this potentially lucrative area capitalizes on
detailed demographic information the software company
has gathered over the years, raisingprivacy Latest News
about privacy concerns for some.
It also comes as
Microsoft continues its aggressive effort to catch up
in online search with market leaders Google and Yahoo
Latest News about Yahoo.
Google, the search
leader, is thriving in large part because advertisers
are willing to pay more to have their Web site links displayed
prominently alongside Google's regular search results.
Microsoft also
displays such sponsored links next to its regular
results, which are based on a formula that ranks Web pages
according to such factors as relevance, but has until
now outsourced the bulk of the job of selling sponsored
links to Yahoo.
Microsoft's paid
search platform will provide detailed -- but not personally
identifiable -- information, such as gender, age and location,
for many people who use itssearch engine Latest News about
search engine, allowing advertisers to target their ads
to a specific audience.
Yusuf Mehdi, a
corporate vice president with the MSN unit, said Microsoft
has gathered this personal information by tracking users
who have logged into its Hotmail e-mail program or other
Microsoft Web sites, and then matching the data they provided
with publicly known demographics, such as average income
for a particular ZIP code.
The company uses
computer addresses to track who's who, but Mehdi said
it will not release names or other personally identifiable
information.
For example, a car
company could choose to have Microsoft display its sports
car link when a man types in certain keywords, and a link
to an SUV model when a woman uses the search criteria.
Microsoft would then
provide the company with detailed information about the
demographics of the people who clicked on its ads.
Analyst Niki Scevak
with Jupiter Research said Microsoft's detailed profiles,
combined with plans to eventually also sell regular ads
on other MSN Web sites through the same system, could
give the company a significant edge over its rivals in
the long-term.
But although the
personal information is anonymous, analyst David Garrity
with Caris & Co. said the detailed profiles could
dissuade some consumers from using the search engine.
"This all very
much smacks of Big Brother," Garrity said.
Chris Hoofnagle
of the Electronic Privacy Information Center said
Microsoft's efforts are part of an industrywide trend
of using personal information to garner advertising dollars.
Google scans content to
plant relevant ads for its free e-mail service.
Yahoo
uses some personal information gathered from its
customers to target advertising on the Yahoo network, but
it does not provide that service for outside clients like
MSN.
"Steadily, the
Internet is becoming more invasive," Hoofnagle said.
Microsoft said
it will test the paid search product in Singapore
and France over the next six months, with plans to eventually
expand into other markets.
In the France trial,
Mehdi said Microsoft's paid search technology will complement
Yahoo's on MSN sites. But Mehdi said it was too early
to say what might happen after Microsoft's current contract
with Yahoo runs out in June 2006.
Garrity said Microsoft
also has other hurdles before it can catch up with Google
and Yahoo.
Microsoft has
made its name selling software, he said, and the new
model of giving a product away and making money from advertising
requires a steep learning curve.
Microsoft also has
not yet done a good enough job of showing consumers why
its MSN search engine is different enough from Google's
and Yahoo's to warrant switching loyalties, he said.
"Microsoft
is going to have to differentiate msn.com or MSN Search
as a destination for consumers to come to," Garrity
said.
Microsoft's
paid search effort will be unveiled Wednesday at
the company's annual MSN Strategic Account Summit, geared
toward the online advertising industry.
At the same
event last year, Microsoft Chief Executive Steve
Ballmer conceded that one of Microsoft's biggest missteps
was not to use its in-house research and development
staff to create a proprietary search engine earlier.
"That's probably
the thing I feel worst about over the last few years
-- not making our own R&D investment," Ballmer
said then.
The company has
since worked hard to play catch-up, including formally
launching its own Internet search engine a couple of
months ago.
At this year's
event on Microsoft's Redmond campus, speakers include
Google CEO Eric Schmidt and Barry Diller, CEO of IAC/InterActiveCorp.
But in a switch from previous years, Microsoft is not
allowing journalists to attend the meeting.
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