Microsoft AdCenter Goes Live

Microsoft flipped the switch today on its AdCenter paid search platform. It’s now using it to run all ads on its U.S. search properties.

Microsoft had been slowly increasing the portion of ads on MSN and Windows Live that were served by AdCenter instead of those from its expiring deal with Yahoo Search Marketing. Since late February, AdCenter has handled 70 percent of Microsoft’s ads on U.S. searches.

At its annual MSN Strategic Account Summit, Microsoft CEO Steve Ballmer shared Microsoft’s plans to spend $1.1 billion in research and development for MSN and advertising-related products this year, highlighting work that’s underway to improve customer experiences in interactive TV, mobile, and gaming, among others.

“Only one or two companies can keep pace with consumer demand and advertisers’ needs. No one is more committed to investing and partnering with you around this need,” Ballmer told the crowd of executives from the advertising, marketing and media industries. “I want you to know that we’re a patient, long-term, and committed participant in everything we do.”

Microsoft today announced plans for a U.S. beta test of a contextual ad product this summer, beginning with Microsoft’s own sites, and expanding to third-party sites later this year. AdCenter, which has been rebranded with the Microsoft moniker rather than MSN, will be used to serve search, contextual and display ads on Windows Live Mail, Windows Live Spaces, Windows Live Safety Center, Windows Live for Mobile, Office Live and Office Online, and Xbox.com. It has been testing ads on some of its services in limited markets since March.

The ContentAds platform would compete with rival contextual networks such as Google AdSense and Yahoo Publisher Network. Yusuf Mehdi, Microsoft SVP and chief advertising strategist, highlighted Microsoft’s plans to incorporate its advanced targeting features into ContentAds as well, and to maintain search and contextual ads in separate marketplaces. Advertisers have long complained that Google does not offer enough control to manage the two separately. ContentAds would also offer contextual graphical ads, something that Google has offered only on a very limited basis.

AdCenter was unveiled at this same event last year, and went live in France and Singapore in September. The U.S. pilot has been in use by several advertisers since October, with increasing distribution on MSN and Windows Live since then. Around that time, Microsoft restructured the company with a renewed emphasis on advertising. Testing of adCenter will begin in the U.K. in June.