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Microsoft Takes ScreenTonic For Mobile Advertising

UPDATED: With pressure mounting to make a move in the wake of online ad buys by rivals Google and Yahoo, Microsoft  jumped into the mobile advertising pool by agreeing to purchase ScreenTonic SA for an undisclosed sum.

ScreenTonic's STAMP advertising platform includes an ad server to pipe banners and text ads over portals, interstitials in Java or MMS applications, video billboards and ad spots in SMS  messages for all mobile platforms.

STAMP also features an ad-management interface, which manages inventory planning, ad space, ad verification and testing, programming and performance control.

Microsoft said in a statement that Paris-based ScreenTonic's assets will extend Microsoft's commitment to "connect advertisers with their target audiences at home, at work and on the go" through PCs, Xbox game systems and mobile phones.

"The mobile Internet is an extraordinary vehicle for brands to connect with their target audiences, because devices like cell phones enable interaction to take place virtually anywhere or anytime," said Steve Berkowitz, senior vice president of the Online Services Group at Microsoft.

While Microsoft will be acquiring software, it will also rake in some quality brand recognition; ScreenTonic has relationships with several high-profile ad partners, including Coca-Cola, Disney, Apple and Nokia. Earlier this year, the company passed the 1 billion mark in page impressions sold for mobile phones.

ScreenTonic will continue to operate out of its current headquarters in Paris.

The deal comes two days after Microsoft executives touted the company's communications, video, gaming and music products as ideal locations for marketers to launch their advertising pitches.

By most counts, the deal makes sense.

Microsoft, which in March unveiled its DeepFish mobile browser to improve the way users access content from handheld devices, has been looking to bulk up its Microsoft Digital Advertising Solutions portfolio.

Moreover, mobile advertising is expected to be a huge market once content providers and mobile operators can solve the riddle of what ads and schemes will gain traction on small mobile devices with tiny screens.

But analysts were expecting a much bigger play from Microsoft on the advertising front after rivals Google  and Yahoo  snapped up online ad powers DoubleClick and Right Media, respectively.

For two days, rumors have floated that Microsoft is considering a purchase of one of the last large purveyors of online advertising, 24/7 Media , for about $1 billion.

But Microsoft is not prone to making large purchases, preferring to build its own technology and fill in the gaps with small buys, which is why ScreenTonic is a logical fit.

However, Microsoft still easily trails DoubleClick and Yahoo in the online advertising market, as the three giants seek to stock up on as much Web mindshare as possible.

Yankee Group analyst Laura DiDio praised Microsoft's move in an e-mail to internetnews.com.

"I'm sure Microsoft would like to score a 'big deal' to counter Google-DoubleClick and Yahoo-Right Media, but those deals are few and far between," DiDio wrote.

DiDio added that ScreenTonic's European roots and partners could help Microsoft alleviate the ongoing antitrust tensions between Microsoft and the European Commission.

"Screen Tonic has close relationships with some of the largest mobile operators in France and Belgium, which are hotbeds (along with Germany) of anti-Microsoft sentiment. It helps Microsoft to have gained some important allies via the Screen Tonic purchase."

Finally, she noted: "Anything Microsoft can do to jumpstart its online advertising efforts to better compete against powerhouse Google is a good thing."