Microsoft on Monday began displaying mobile advertising to MSN Mobile customers for the first time, in hopes of generating additional revenue from the budding business.

Now when mobile users in the United States visit Microsoft's MSN Mobile Web page on their cell phone and smartphone browsers, they'll see banner and text ad placements from companies like Paramount Pictures and Jaguar Cars North America. Both have signed up as Microsoft's early partners.

When displaying the ads, Microsoft said it will conform to the U.S. mobile advertising guidelines supplied by the Mobile Marketing Association, a non-profit made up of agencies, advertisers, device manufacturers, carriers, retailers, software providers, and service providers that want to bring marketing to mobile devices.

The software giant claims that the introduction of mobile ads will enhance the experience for customers: "Microsoft is continuing to make significant investments in the MSN Mobile portal. By incorporating advertising on MSN Mobile, we are allowing advertisers to extend their existing campaigns from PCs to games and now to mobile phones, further delivering on our vision to extend advertising across multiple platforms and devices," said Joanne Bradford, MSN's corporate VP and chief media officer, in a statement.

The technology that Microsoft used to embed banner and text ads in its mobile portal was created by Microsoft's Advertiser and Publisher Solutions Group with expertise gained from its acquisition of ScreenTonic SA, which created a platform specifically designed for managing and providing ads on mobile phones.

Mobile advertising sales in the U.S. accounted for $421 million in 2006. That number is expected to reach nearly $5 billion by 2011 in the U.S. alone, according to market research firm eMarketer. Global mobile advertising sales will reach $11.3 billion by 2011.

Microsoft plans to capitalize on this opportunity through ad placements that provide advertisers with way to reach its MSN Mobile users. The company already launched similar efforts in Belgium, France, Japan, Spain, and the U.K.

Consumers, however, are not so eager to see advertising on their mobile phones. Many find mobile ads annoying, even when they come with promotions and special offerings. Microsoft is trying to present mobile ads as an "enhancement" to the content it already offers on MSN Mobile. But it might be a tough sell to mobile users who are already frustrated with their tiny phone screens without banner ads taking up the precious viewing space.