New Behavioral Targeting Ideas in MSN's AdLab

 

Let’s try an experiment. I’ll provide a short list of famous places where big, transformative ideas were born, then you say the next one that comes to mind:

• Edison’s Invention Factory
• Los Alamos National Laboratory
• NASA’s Jet Propulsion Lab
• Xerox PARC
• The MIT Media Lab

Did you say Microsoft adCenter Incubation Lab? If you didn’t, I’m not surprised.

That may change in the not-so-distant future if you’re a digital marketer, and even sooner if you’re keeping up on the behavioral targeting space.

What Is It?

A week and a half ago, Microsoft demonstrated a host of new digital advertising technologies being developed in its adCenter Incubation Lab, or adLab, in Redmond, WA, and Beijing. AdLab is focused on applied research and prototyping the next generation of paid search, contextual targeting, social networking, and, yes, behavioral targeting, among other things.

According to Microsoft, 40 different technologies are in varying stages of development at the adLab. The company has assembled a formidable group of researchers and experts in data mining, information retrieval, statistical analysis, artificial intelligence, auction theory, visual computing, and digital media.

Behavioral Targeting

Richer audience intelligence and more control over campaigns are important themes in the adLab’s work. Within the next six months, MSN’s adCenter will be expanded to allow advertisers to target ads to behavioral segments based on user interests inferred from browsing habits.

Behavioral targeting of this sort is already quite available on the market. What’s unique about adCenter’s approach is it will allow advertisers to build custom segments, something that could allow more accurate targeting than the current approach, which is based on prebuilt and sometimes broad and inflexible segment definitions.

This is an interesting proposition. If it can be done on the right scale, it will create a very compelling advertising opportunity. The more relevant the ads are, the more difficult they are to ignore.

Why Does Microsoft Need adLab?

Clearly adLab is viewed as a way to strengthen the MSN adCenter offering, to build in sustainable competitive advantages via patented new ideas. Further, Microsoft seems to be falling behind Apple and Google in the headlines, two companies synonymous with “innovation” in digital media. This structured approach to innovation has worked before, and it could work again.

And of course, there’s the the-world-is-flat reason. Building ties to China, where there’s a plentiful supply of low-cost, skilled researchers is a reason in itself. But there’s more.

Microsoft views the Chinese search market as critical to remaining competitive against Yahoo and Google. Hiring top researchers there to work on the problem is a move that reflects these very high stakes.

Conclusion

I, for one, am very much looking forward to seeing more new and improved digital advertising technologies, especially around behavioral targeting. Microsoft’s investment in the adLab shows it has big plans for adCenter, and it isn’t going to stand by quietly as Apple and Google invent the future of digital media and ad-funded content distribution.

And so we have adLab.

Maybe I’ll try the list-of-famous-innovation-sites experiment with you again in a year or so. Who knows? You may just reply, “Oh that’s an easy one. Microsoft adCenter Incubation Lab.”