Microsoft said yesterday that it is entering the mobile ad arena, following competitors like Google into one of the fastest-growing sectors of the Internet economy.

The software colossus will be moving only gingerly into the space, however, placing banner ads at the top of Web pages viewed through its MSN Mobile platform and optimizing them to fit the screen size and browser of almost any handset.

Additionally, Microsoft announced new content channels for its mobile platform, including an expansion of its partnership with MovieTickets.com that will enable mobile phone users to enter a ZIP code to view show times and purchase tickets at nearby theaters.

The move follows a massive effort by Google to expand into the mobile space, including a string of acquisitions and providing the core technology behind the Open Handset Alliance's phone software push. The search leader also plans to participate in the multibillion-dollar wireless spectrum auction next month, but has disclosed little in the way of specific plans should it win.

Meanwhile, Microsoft developed its new platform in large part through combined efforts with two smaller ad technology players that it acquired in May -- Paris-based ScreenTonic and aQuantive. Using the two companies' technology, the ad placement platform will work with all carriers and virtually any handset model.

Bank of America, Jaguar Cars of North America and Paramount Pictures have signed on as the first three advertisers on Microsoft's platform. The company also said it's in advanced negotiations with other brands, with more announcements likely to be made soon.

Today's launch represents just the first step in Microsoft's developing mobile ad strategy, according to Phil Holden, the company's director of online services.

"We as a company are very firmly focused on mobile services," Holden told InternetNews.com.

"When you leave your house in the morning, you grab your keys, your wallet and your mobile phone," he said. "That relevancy -- that it's a device that's always with you -- is not lost on us."

Since Microsoft launched the MSN Mobile platform in June, it has been adding content to enhance the browser-based, rich-media experience. Today, the company launched an astrology channel and added a spate of new ring tones, wallpapers, games and other content available for download on the portal, which already features content from providers like Fox Sports and MSNBC.

Broadly, Microsoft's mobile strategy consists of two parts: developed and developing markets. In areas falling in the first category, such as the United States, Japan and Europe, the software giant is looking to carry into mobile the usage patterns customers have developed for Microsoft products on their PCs.

In still-developing markets such as China, Russia and India, where the mobile phone remains the principal computing device, Microsoft is looking to roll out mobile applications first, Holden said.

While today's launch only applies to U.S. consumers, the company plans for the ad platform to soon make it to foreign markets, even if Holden isn't saying which ones.

Holden did hint that Microsoft is working on a number of more sophisticated mobile-ad technologies that could follow today's announcement, which he described as a "foundation" for more robust capabilities in the future.

Contextual-placement technology, like that which Google offers with its mobile ads, could represent one next step for Microsoft. At present, there is no contextual dimension to the placement of its banner ads. However, a key part of that contextualization -- the mobile cookie -- is already in development at the company.

"I will say that when I look into the future, it's even more important that we deliver a relevant experience to the consumer," he said. "That's where you're going to see the focus."

Such a move would be a critical step toward closing the gap with Google's mobile ad technology, which already offers a contextual placement system mirroring its browser-based search ads on the computer.

Location-based ad placement could represent another enhancement to Microsoft's platform. In such a scenario, an advertiser like Starbucks could not only serve an ad up to a well-documented coffee drinker, it could send him or her a coupon good at any of the green-and-white java giant's shops within a five-block radius.

Here, too, Microsoft already is making use of similar technology. The company has partnered with Sprint Nextel on location-based search capabilities on GPS-enabled Sprint phones. Microsoft also offers location-based search on Windows Mobile smartphones.

While there is currently no accompanying ad-placement technology in the new banner platform, Holden said Microsoft is exploring the concept.

Another potential addition to its mobile ad platform is "click-to-call" technology. Microsoft has already deployed click-to-call in the sponsored results of its mobile search applications, although the banner ads announced today will not have that capability.

Story Courtesy of internetnews.com