MSN adCenter: The Next-Gen Behavioral Platform?

While I was in San Francisco at OgilvyOne’s Verge digital summit last week, a big development for online advertisers was announced in New York during Advertising Week.

Microsoft’s Yusuf Mehdi, SVP of MSN Information Services and Merchant Platform, announced Microsoft plans to extend its new online advertising system, MSN adCenter, to deliver ads across a variety of the company’s products and services, including exploring ad-supported software and adding in behavioral targeting.

What does this mean?

It means MSN adCenter will expand from the auction-based paid search platform, which is now being tested in France and Singapore, to integrate other media such as mobile devices, console gaming, interactive television, even ad-supported software.

So while paid search is the first component, Microsoft has an ambitious agenda for MSN adCenter to provide advertisers a one-stop shop from which to plan, deliver and optimize campaigns on a large scale informed by consumer intelligence gleaned from a variety of sources, including (presumably) the ad-supported software itself.

Ad-supported software? Adware?

While it’s not exactly clear how an ad-supported software component would work, the possibilities are enormous. It would seem no other company is as good a position to deliver on this as Microsoft.

It might look quite familiar, like advertising targeted and delivered through Web-based software applications such as email (like Hotmail), search (MSN Search), user-generated content (MSN Spaces), instant messaging (MSN Messenger), and so on.

But it might be radically new, like ad-supported Internet versions of Microsoft’s productivity applications such as Outlook, PowerPoint, Excel, and/or Word. Or there may be others, still yet to be determined.

This second direction would be a really big bet for Microsoft. User privacy concerns would be of special concern, as would striking the right balance between ad-supported and over-commercialized.

There are other productivity suites out there that would welcome Microsoft Office quitters if this wasn’t correctly executed, or if there was a collective sense among users of being spied on. IBM’s Lotus SmartSuite or Sun Microsystem’s StarOffice are just two alternatives at the top of the list.

Behavioral targeting platform?

I have no doubt whatsoever these early views of what MSN’s adCenter could become provide those who are looking a good glimpse of the potential of the next-generation of behavioral marketing; even of Internet marketing overall.

MSN adCenter is already designed to allow keyword advertisers to profile target audiences based on geographic location, gender, age range, and time of day. Factoring in basic anonymous user behaviors, such as recency and frequency of visits to certain types of content, wouldn’t be a big step, and would add to a behavioral dimension.

With this potential for audience scale across Microsoft: the registration-based content sites, Internet-delivered software applications, and range of devices that share a common operating environment, you could truly describe it as a “platform,” a base of technologies upon which other technologies or processes can be built.

At present, behaviorally targeted advertising exists at the placement, site, and network levels. This year, the network level started to really become interesting with Tacoda’s AudienceMatch network and Revenue Science’s Audience Search network. The platform level seems the next new thing.

It will be interesting to watch as MSN adCenter evolves over time, and to see how Yahoo, Google, and media companies of all stripes respond. “Defensively” would be my prediction.