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Microsoft switches to own online ad broker service

Microsoft Corp. said on Wednesday it switched to its own online ad brokering service called adCenter, so advertisers can directly place ads on the software maker's search sites instead of going through Yahoo Inc.

Microsoft's launch of adCenter is part of the world's largest software maker's push to better compete with Internet rivals Google Inc. and Yahoo in a U.S. online advertising market estimated to be worth around $15 billion (8 billion pounds).

After relinquishing the early advantage in paid search, Microsoft has invested heavily in recent years to create its own search engine and ad brokering service.

Advertisers bought pay-per-click ads on MSN search through Yahoo's Overture service until last year, but adCenter handled an increasing percentage of those transactions during testing in recent months.

In order to lure more advertisers to adCenter, Microsoft aims to increase the number of people using its search site.

The company started testing a new Windows Live search engine with features aimed at allowing users to more simply view search results. However, its main MSN search engine lost market share again to Google and Yahoo in March.

Its U.S. share fell to 11 percent from 14 percent, while Google and Yahoo each gained, rising to 49 percent and 22 percent of the search market.

AdCenter will be initially limited to paid search, but Microsoft envisions the service being a one-stop shop for online advertising across many of the company's software platforms including Xbox games and mobile phones.

The brokering service is expected to eventually allow advertisers to place advertisements on Microsoft's Internet services sites, such as Windows Live email or Office Live.

Analysts forecast Microsoft will spend an additional $2 billion in the coming fiscal year starting July 1, speculating that much of the investment will go towards building an infrastructure for an online services supported by ad revenue.

"The ad community is extremely important to us as we evolve Microsoft from a software company into the world's largest, most attractive provider of online media through MSN, Windows Live and adCenter," Microsoft Chief Executive Steve Ballmer said in a statement.

Microsoft said adCenter allows advertisers to better track spending campaigns while providing more data to target potential customers.

The brokering service runs in the U.S., France and Singapore with tests starting in June in the UK.

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