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Posted 3/16/2005 2:29 AM     Updated 3/16/2005 12:49 PM
Today's Top Money Stories

MSN to offer search ads through AdCenter
Internet search giants Google and Yahoo no longer have the red-hot search advertising market all to themselves.

Microsoft's MSN on Wednesday will unveil its answer to Google and Yahoo's pay-per-click text ad programs, called MSN AdCenter. Advertisers love search ads because they pay only if users click the ads, which show up next to search results.

MSN currently runs search ads provided by Yahoo's Overture unit, with a contract that runs through July 2006.

As with many Microsoft announcements, this one will take much time to be implemented. Microsoft CEO Steve Ballmer plans to show off the new technology today at an advertising summit being held on the Microsoft campus in Redmond, Wash.

MSN AdCenter will begin testing in two markets — France and Singapore. Microsoft is vague about when the test will begin, saying only that it will be within the next six months.

Still, search marketers who make their living placing ads on the Google and Yahoo networks are delighted at the prospect of having a third vehicle to choose from.

"Competition is fantastic," says Chris Winfield, the president of New York-based search marketing firm 10e20 Web Design. "I'm hoping this will lower some of the costs per click. I can't see Microsoft charging as much as Google and Yahoo, at least not in the beginning."

Winfield thinks clients will adjust their budgets to tout their wares on all three networks, which could hurt Yahoo. Because advertisers now are buying Yahoo to be on MSN, "Yahoo has to take a hit," Winfield says.

But Safa Rashtchy, an analyst at research firm Piper Jaffray, says Yahoo's loss will be minimal. He estimates that MSN revenues represent around 10% of Yahoo's annual search profits, worth roughly $120 million yearly.

"Yahoo will make it up with growth in search advertising," he says. The search market will expand from a projected $8.3 billion this year to $23.7 billion in 2010, Rashtchy says.

MSN has a way to go to catch up to Google.

Forrester Research analyst Charlene Li says MSN has a lot of Internet traffic but that most users go there for things besides search. "This shows Microsoft is serious about search," she says.

The "search war" among Google, Yahoo and MSN often is portrayed as heated, but Microsoft's meeting with advertisers today includes presentations by Google CEO Eric Schmidt and Yahoo search advertising chief Ted Meisel.

"It shows that we can all work together," says Adam Sohn, MSN's director of global sales and marketing. "There's a real recognition that the space can grow and that there's opportunities for all of us."

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