Redmond, Washington — With Microsoft’s ad deal with Yahoo getting prolonged, The Redmond, Wash.-based software giant just added yet another layer of weapons in its battle against Google and others for search advertising. Microsoft Corp. on Monday announced that it has signed a deal with OpenX Technologies Inc., a Pasadena-based Web advertising start-up have partnered to expand the reach of contextual online advertising service designed to compete with rival technology offered by Google Inc.’s AdSense.
Under the terms of the multi-year partnership, Microsoft and OpenX will enhance the potential reach of those ads by making them available to its network of 150,000 websites, which display 300 billion ads every month. OpenX will be the preferred partner to publishers for enterprise and server solutions, and it will promote Microsoft’s Content Ads, which matches ads to relevant editorial content, to its customers.
Mutually, Microsoft has agreed to using its clout to refer larger business customers to OpenX, which also helps companies tailor websites to increase advertising revenue. Microsoft competes with Google Inc. and Yahoo Inc. in the fast-growing online ad market.
The deal will substantially spread out the distribution of OpenX’s technology for serving ads on websites, as the company seeks to boost its roster of large Web publishers, said CEO Tim Cadogan.
OpenX will be the preferred partner for Microsoft’s enterprise ad-serving business. Microsoft is banking on Content Ads — a program that matches ads to specific editorial content, which emerged from early, “beta” status in May, offering advertisers increased effectiveness — and future products to its web publishers. Content Ads is designed to compete with Google’s AdSense product, a popular means for smaller Internet publishers to earn advertising revenue.
“Microsoft considers that rapid innovation and openness is foundational to great advertising technology,” said Scott Howe, corporate vice president of Microsoft’s Advertiser & Publisher Solutions, the company’s ad technology and monetization platform. “We are pleased to partner with a company that favors this vision. OpenX is a leading technology provider of valuable alternatives and solutions to the publisher community and, by extension, the digital advertising ecosystem as a whole.”
OpenX will also simplify it for its Web publisher customers to use Microsoft technology that analyzes the content of a Web page and matches relevant ads to the page. That promotion will be two-fold. First, Content Ads will be available to publishers who sign up for OpenX Market for page monetization. OpenX will also build a plug-in to the OpenX Ad Server intended to make it easier for customers to sign up for Content Ads and put them on their own Web sites.
OpenX will be the first reseller to build a plug-in for Content Ads, Microsoft said.
OpenX, which runs one of the nation’s largest independent online advertising networks, develops software that enables marketers to deliver ads to websites that are visited by the kind of buyers they are targeting. Similarly, advertisers use Microsoft to create and distribute ads, be they for flowers, movies or Maseratis.
Most of the software developed by 3-year-old OpenX is based on open source technology — built by communities of volunteer experts — and available for free. As such it has attracted smaller, less financially able websites looking to make money by selling ads.
Cadogan acknowledged that Microsoft owns its own online advertising exchange, thanks to its purchase of AdECN Inc. in 2007. The Microsoft exchange is expected to be opened up to buyers and sellers soon. Google announced the launch of its own exchange in September.
“Microsoft is investing a lot in search and display [advertising], and we wanted to make that available to our publisher base,” Cadogan said.
Yahoo Inc. offers its own contextual advertising service through its Yahoo Publisher Network.
Microsoft Publishing Business Group General Manager Maggie Finch said that the OpenX deal will be “a big benefit for Microsoft, in gaining access to a large array of quality publishers that OpenX already serves.”
The deal comes more than a year after Microsoft and OpenX ran a trial of the arrangement, during which OpenX invited its publishers to test out the product.
“We think our product suite is particularly well-suited to help increase the businesses of those new publishers Microsoft will refer to us,” Cadogan, said in a statement. “Similarly, we think that Content Ads will provide an additional and important monetization option for existing OpenX publishers, while helping them increase their advertising revenue.”
Behind the deal was OpenX’s executive team made of up former Yahoo and AOL executives, including former AOL CEO Jonathan Miller, who is now chairman of OpenX, and Yahoo’s former senior vice president of global advertising marketplaces, Tim Cadogan, who is now CEO of OpenX.
“Obviously we are thrilled and the fact that Microsoft will reach out to a company like ours is an important signal of Microsoft’s openness to openness,” he added. “I think it will be very interesting to see what they do going forward.”
Microsoft and OpenX did not disclose the financial terms of the multiyear deal, though there will be the opportunity for both companies to make money in the deal, said Peter MacDonald, Microsoft’s director of advertising business development.
The deal marks the latest turn in the competitive landscape for ad serving technology, which allows Web publishers to manage ads across their sites.
OpenX competes with companies like Google Inc.’s DoubleClick and Microsoft’s own aQuantive product.
Los Angeles-based OpenX raised a $10 million round of venture capital funding in May.