MSN Claims Online Ad Momentum

Thanks to a global user base of 350 million, MSN’s online ad business is outpacing Yahoo!’s, according to an MSN executive.

Speaking at Microsoft’s annual analyst meeting last week, Yusuf Mehdi, vice president of MSN, said MSN was growing faster than Internet advertising industry as a whole — even faster than Yahoo!

“We’ve actually done better than our share and taken share in a growing market,” he said.

Since Microsoft does not break out numbers for the money-losing Internet service, Mehdi supplied analysts only with un-audited internal numbers to compare to the publicly stated results of Yahoo! and AOL.

Mehdi showed MSN taking in $832 million in ad revenue this year, a 48 percent increase from 2002, serving almost 90 percent of the top 100 advertisers. In comparison, Mehdi pegged Yahoo!’s 2003 ad revenues at $771 million and AOL’s at $900 million.

“We’re doing fantastic as an industry in terms of driving new revenues, getting industry standardization, and in the paid-click model, paid services is really fueling a lot of growth,” he said.

On that front, Mehdi offered little insight into the company’s plans in the wake of Yahoo!’s $1.63 billion agreement to buy Overture Services, which is contracted to provide MSN with paid listings through 2004.

“We’re going to see a lot of investment from us in the search category to do a great job in algorithmic [search} … as well as in the paid search model with partnerships and if we have to on our own we’re going to do that work there,” he said.

MSN’ acknowledged months ago its move to build its own algorithmic search technology, tripling its search staff to come up with an in-house answer to Google and Yahoo!. The move was hastened by Yahoo!’s first major move in search, the acquisition of Inktomi last December.

“We have some good numbers in search, but I’ll be honest, search has been an area where we haven’t done a lot in terms of progress, mostly because we weren’t investing in the technology to build a better search service,” Mehdi said.

Most industry analysts expect MSN will either acquire another independent paid listings provider, such as LookSmart or FindWhat.com, or build its own platform to compete with Overture and Google.