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Microsoft Demos Next-Gen Web Advertising Concepts

The company showed new ad technologies ranging from contextual video ads and multitouch interactive advertising to image categorization and advanced advertising analytics.

As Microsoft struggles to gain a stronger foothold in the Web advertising game, its research and development arms aren't sitting still. The company's adCenter Labs provided a sneak peek at some of its next-generation advertising concepts Tuesday at an event on Microsoft's campus in Redmond, Wash.

Microsoft's display of innovation in digital advertising isn't surprising, especially with the company's purchase of advertising firm aQuantive last year and several recent commitments to advertising as a key technology for the company from top Microsoft executives like CEO Steve Ballmer. Last week's $44.6 billion bid for Yahoo only adds to a sense that Microsoft is urgently trying to stay on top of digital advertising and compete with Google on the Web.

"We're in the course of building an online business, and an online business is typically advertising funded," Ballmer told financial analysts in a semiannual financial update Monday. "That's a new muscle, a new set of skills that we're building."

The company demonstrated seven new technologies Tuesday, spanning a spectrum of advertising opportunities from contextual video ads and multitouch interactive advertising to image categorization and advanced advertising analytics.

Since complex algorithms that sort and organize data are key to advertising, some of the demos focused on new algorithms. One, called Visual Product Browsing, categorizes images by the data in the image itself, rather than by manual tags, file names, and categories, as images often are. For example, a shopper looking for a cheaper but similar pair of shoes to that Jimmy Choo pair could simply click a button called "more like this" to see other options. At least one search engine,, already does something similar.

"Solutions to today's challenges must be capable of handling and understanding the complexity of vast amounts of data," Tarek Najm, technical fellow at Microsoft, said in a statement. "To address that challenge, we are developing advertising algorithms that can anticipate and understand consumer behavior faster than the speed of thought."

One algorithm determines where to unobtrusively place advertising in the same frame as a video, another blocks advertisements from being served alongside content advertisers wouldn't want to be associated with, and the last automatically categorizes content, much like a few of Microsoft's enterprise search competitors are doing.

Speech recognition, long a technology that Microsoft has done significant research on, showed up as well. Microsoft showed how contextual ads could be served alongside video by using speech recognition to identify the topic of a video. Advertisers could thus display ads for sports apparel alongside a video about basketball or furniture with a video for home improvement.

Another demo of a technology called Air Wave showed how multitouch computers like Microsoft's Surface tabletop computer could be used in advertising inside retail stores or in other public places. With a Webcam added to the setup, customers could try on clothing or accessories virtually before they buy.

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