Microsoft signs ad deal with Facebook

In an attempt to grab a bigger stake in the online advertising market, the software major, Microsoft has entered into an exclusive deal to provide graphical display ads and sponsored links for social networking website Facebook, largely aimed at students in the United States.

The online social networking directory, Facebook will use Microsoft's adcenter software to display ads to its more than 9 million subscribers, the companies confirmed in a statement.

Terms of the new multi-year agreement, the first major deal for Microsoft's new adCenter platform, have yet to be released. The deal, however, is expected to start running later this year and is likely to continue till the middle of 2009.

Calling the agreement as prodigiously fetching to advertisers, Steve Berkowitz, senior vice president of the Online Services Group at Microsoft, said, “We believe that the combination of Microsoft and Facebook strengths will be incredibly attractive to advertisers as they forge more meaningful connections with one of the largest, most engaged audiences on the Internet," adding that "The consumer assets brought to bear by this relationship will be very hard to match."

The recent deal is a win for the software giant, which lost out to Google in negotiating similar agreements with News Corp.'s myspace.com and Time Warner's AOL. In August the MySpace.com joined forces with Google in an advertising deal.

Microsoft started adcenter, which works much like Google's AdWords program, in May in an attempt to compete with search engines Google and Yahoo, who have both witnessed their online advertising platforms generating strong revenues.

However, Microsoft foresees ad sales declining initially, but it asserts that adCenter is the key to its future success. Penetrating into the ad business with Facebook gives Microsoft instant access to millions of eyeballs and will be the first real test of adCenter.

The Facebook is a friend finder site, which is the seventh most popular site in the US, has more than nine million registered users.