Microsoft aims to be one of "top two" in Web advertising

SEATTLE Thu Nov 15, 2007 9:54pm EST

Windows Vista logos decorate downtown Bucharest, January 31, 2007. Microsoft aims to be one of the top two players in the online advertising market in three to five years, a company executive in charge of the business said on Thursday. REUTERS/Bogdan Cristel

Windows Vista logos decorate downtown Bucharest, January 31, 2007. Microsoft aims to be one of the top two players in the online advertising market in three to five years, a company executive in charge of the business said on Thursday.

Credit: Reuters/Bogdan Cristel

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SEATTLE (Reuters) - Microsoft Corp. aims to be one of the top two players in the online advertising market in three to five years, a company executive in charge of the business said on Thursday.

Speaking at a UBS investor conference, Kevin Johnson, president of Microsoft's platforms and services division, laid out the company's strategy to become a leader in the growing online advertising industry with a "10, 20, 30, 40" plan.

The plan, which represents Microsoft's aspirations over the next three to five years, calls on Microsoft to increase the company's share in Web search, page views, percentage of time on the Internet and percentage of advertising dollars.

The world's largest software maker currently trails Google Inc. and Yahoo Inc. in the $40 billion global online advertising market dominated by selling advertising alongside Web search links.

Microsoft conveyed its seriousness about the business with a $6 billion acquisition of digital advertising firm aQuantive in August. It was the company's biggest-ever acquisition and the company paid a 85 percent premium to land aQuantive.

"If you look at the landscape of other competitors or other companies in this area, not only do we have the technology, research and development capability to deploy, but (we have) our willingness to invest for the long term," said Johnson in a question-and-answer session with UBS analyst Heather Bellini.

Under the "10, 20, 30, 40" plan, Microsoft wants its Web sites like MSN.com and Windows Live e-mail to comprise 10 percent of all Internet page views from about 6 percent now, Johnson said.

Redmond, Washington-based Microsoft also wants to boost the percentage of minutes spent at company Web sites, out of total time spent on the Internet, to 20 percent from about 17 percent.

Another element of Microsoft's plan is to raise its share in online search to 30 percent. Research firm comScore said Microsoft's search market share was about 10 percent in September.

Johnson said Microsoft has worked to improve the relevance of its Web search results and how it presents that information, but the company has failed to close the gap on Google and Yahoo.

Finally, Microsoft aims to capture 40 percent of all dollars coming through digital advertising platforms compared with around 6 percent now.

In addition to investments in aQuantive, Microsoft said it will have to continue to invest in data centers and servers to power much of its Web services business. Johnson said the company's investments in data centers and servers will range between $1.5 billion to $1.7 billion this year.

(Reporting by Daisuke Wakabayashi; Editing by Carol Bishopric)

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