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MSN Preps Search Ad Program

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NEW YORK Microsoft said it would begin testing its new MSN search advertising system in the United States in October.

The invite-only test of what Microsoft is calling MSN Keywords will involve 500 large search advertisers, which MSN senior director Joe Doran called "the biggest of the big that are playing in this area."

MSN Keywords advertisers will have advanced search-targeting options, such as tying their keyword ads to time, geography, gender and other factors. MSN will operate an auction to determine ad placement.

Doran said MSN would test the system's performance against Yahoo's paid search results by sending some users results with MSN Keywords and other users results with Yahoo ads. MSN has a search advertising distribution agreement with Yahoo that runs until June 2006.

"We wanted to go to an experience where we could see how the ads performed in a standalone environment," he said.

The search advertising market, long dominated by Google and Yahoo, is getting new competitors. Later this month, Ask Jeeves plans to start a search advertising system. Search industry experts tab MSN, which attracts 16 percent of Internet searches, according to ComScore Media Metrix, as a potential third widely distributed search-advertising option.

While MSN will not display its own ads alongside Yahoo ads in the test, Doran said that does not mean it plans to fully displace Yahoo listings when MSN Keywords broadly launches sometime in 2006.

"There's nothing to preclude a backfill solution," he said.

MSN Keywords is part of MSN adCenter, an online advertising platform that will use demographics and search to target specific audiences across a variety of MSN online media, including display ads. Microsoft announced MSN adCenter in April, and it has been testing it since then in France and Singapore, where it will have a widespread commercial launch in September.

Catching up to Google and Yahoo in the search market is a top priority at Microsoft, which spent $100 million to build its own search engine and an estimated $150 million to promote it.