Online search is just the beginning of Microsoft's aggressive new push into Web advertising, company executives said yesterday at a gathering of big advertisers in Redmond.

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Online search is just the beginning of Microsoft’s aggressive new push into Web advertising, company executives said yesterday at a gathering of big advertisers in Redmond.

In a move to catch up with rivals such as Google and Yahoo!, Microsoft unveiled a prototype of AdCenter, its own technology for selling ads based on words that consumers enter into its MSN search engine. MSN has been using Yahoo!’s ad technology.

But search is only part of the ad-selling platform. Microsoft plans to use it as a base to expand into other media such as television, when people start watching shows delivered over the Internet instead of the airwaves.

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In that emerging market Microsoft has “a leading edge position” after a decade of research and investment in television technology, Chief Executive Steve Ballmer said.

“We can use the same backends that are used to deliver targeted advertising on the Internet to deliver targeted advertising to somebody who is watching television,” Ballmer said in his keynote speech at Microsoft’s “Strategic Account Summit.”

Microsoft’s TV technology is being tested by SBC Communications, BellSouth and other telephone companies that want to enter the video-distribution business. It can deliver multiple streams of video into the home, so several displays can be shown simultaneously on a TV screen. Viewers can watch two ballgames at once, for instance, and targeted ads can be displayed before and alongside shows as they air.

Journalists were excluded from yesterday’s event but allowed to view Ballmer’s speech on a Web cast, which is still available at

More than 500 executives and marketers are attending the sales event, including representatives of 72 of the top 100 brands, according to Joanne Bradford, MSN advertising vice president.

Microsoft uses the event to sell ads and the value of online advertising in general. It also invites competitors to discuss the future of the medium; other speakers included Google Chief Executive Eric Schmidt and a Yahoo! vice president.

“My goal with this event is to help the industry grow and help the online industry get its fair share of marketing dollars and show marketers we’re all willing to work together for the greater good of the consumer and advertising and marketing effectiveness,” Bradford said.

But Microsoft differentiated itself with the new technology unveiled yesterday by Ballmer and MSN Vice President Yusuf Mehdi.

AdCenter includes a Web interface that has a control panel where advertisers can choose and buy keyword based advertising. That’s fairly standard; Microsoft went further by letting advertisers target specific customers based on demographic information, then provides reports on who actually clicked on the ads.

Companies could buy ads that, for instance, appear when 25- to 30-year-old men in Seattle making $50,000 to $100,000 a year search for Mustang convertible on the MSN Web page.

AdCenter uses information from customers who registered for services such as Hotmail or who tailored the MSN home page to their interests. It supplements that with data purchased from the Experian credit bureau.

A version of Microsoft’s AdCenter platform is being tested in Singapore and France. Bradford wouldn’t say when it will be available more broadly.

One industry analyst said Microsoft’s targeted ads may shake up the industry and command a premium price.

“It’s a really interesting look at the future because they will get to the point where they can do more targeting and more customization of that ad based on who that individual is,” said Jim Nail, an industry analyst with Forrester Research in Cambridge, Mass.

Nail said the technology looks like a key advance in a field that began when Wired displayed the first banner ad in 1995.

“Overture innovated the whole idea of search advertising, Google came in and copied them and did an extremely good job, but there really hasn’t been any innovation in the search space until this,” he said. “This will set off a chain reaction of innovation because Google and Yahoo! will have to respond.”

Google and Yahoo! representatives did not immediately return calls for comment.

Ballmer didn’t identify specific competitors in his speech, but he said online search is still young. He told advertisers their market will change dramatically in the next two to five years, and that Internet search will be far less complicated in five to 10 years.

“People say, ‘Oh, search, search is so great,’ ” he said. “I don’t know about the rest of you, I think we’re sort of 5 percent, 6 percent, 7 percent into the innovation perspective on search. It’s still very hard, actually, to find what you’re looking for on the Internet.”

Brier Dudley: 206-515-5687 or