MSN mimics Google with paid search

Keyword auctions? That sounds familiar...

Keyword auctions? That sounds familiar...

Microsoft is attempting to encroach further into Google's territory with the announcement that it is soon to start selling keyword advertising in the US.

According to the Wall Street Journal, Microsoft will announce its new strategy next week. The strategy involves starting to charge advertisers to display links to their products when certain words are entered into MSN's search facility. The service will be known as MSN Keywords.

The Redmond behemoth has already been beta testing its umbrella search advertising product, adCenter, in the Singaporean and French market but October will see Microsoft take the paid keyword feature into the US, via an invitation-only test.

The trial will use 500 advertisers and search marketers, the WSJ said, who will bid to place their ads alongside the results of a MSN search.

Bill Gates has been eyeing up the search market for some time now, after proclaiming the world's biggest software company had been "stupid as hell" to let Google get such a big drop on it in the search world.

Google is by far the most widely used search engine, with 47 per cent market share, according to research firm Nielsen NetRatings. MSN takes the bronze for search with 12 per cent market share, behind Yahoo!'s 22 per cent.

Of the three market dominating search engines, MSN was the only one to experience a decrease in use over the first half of this year, seeing searches drop by around six per cent.

The online search market is becoming increasingly lucrative, with around $456m being spent by advertisers last month alone.

It's already a key element of Google's business, drawing in 47 per cent - or $584m - of the search engine's revenue in the last quarter.

Julian Smith, online advertising analyst at JupiterResearch, said Microsoft's move has been carefully worked out by the software giant.

"It's a lucrative place and MSN want to get a piece of that action," he said. "They've really analysed the strengths and weaknesses of the competition in order to come up with this offering."

"It's a tough challenge to win over that market but Microsoft have got the marketing clout and muscle and the deep pockets to push that," Smith added.

Microsoft is not the only search engine looking to emulate Google's money-spinning in paid search.

Yahoo! has also declared its ambitions in the world of paid advertising this week and is expanding its Yahoo! Publisher Network, while Ask Jeeves revealed its own sponsored ad programme on Monday.

Microsoft did not immediately respond to requests for comment.