Microsoft buys mobile ad company

Microsoft today said it has agreed to buy mobile advertising firm ScreenTonic for an undisclosed amount, marking the software giant’s commercial entrance into the infant mobile ad space.

Based in Paris, ScreenTonic has built a platform that delivers display and text ads over WAP sites and portals as well as text SMS ads. The small company has managed to land some fairly large customers, signing up brands like Coca Cola and Reebok for ad distribution and selling its services to a raft of European carriers, including Orange in the U.K and France, Bouygues Telecom in France, Virgin Mobile in the U.K. and Mobistar and Proximus in Belgium.

All of ScreenTonic’s activity so far has been confined to Western Europe, which embraced ad-based content models sooner, but that will soon change as Microsoft plans to use the platform to delivery mobile ads across its network of mobile properties, including MSM, Hotmail and upcoming mobile versions of its Xbox Live and Windows Live services. ScreenTonic will be incorporated into Microsoft Digital Advertising Solutions and operations and sales between the mobile and Internet sides will be integrated along ad customers to perform cross platform ad buys across wired and unwired Web sites. But while there will be cross-over between the ScreenTonic and other operations, Microsoft will keep the two will operate separately, said Matt Champagne, direct of mobile product management for MSN and Windows Live. In fact, Champagne added, Microsoft plans to extend ScreenTonic’s carrier business into the U.S., pursuing service provider deals to power ads on their portals.

Champagne said that the acquisition was more for business purposes than technology purposes. Microsoft had been running trials of mobile ads in the U.S. and in Asia, and after it decided to pursue the business it opted to buy a company that already had a platform and paying customers, Champagne said.

“We got through those trials and satisfied ourselves that following the guidelines of the Mobile Marketing Association we could deliver mobile advertising and still maintain a good customer experience,” Champagne said. ScreenTonic was a natural candidate because it already had relationships with major carriers and advertisers and a commercially running platform, he said.

One mobile ad aspect that won’t be run by the ScreenTonic platform will be mobile search advertising. Last year, Microsoft bought MotionBridge, another Paris-based company that runs mobile search software for carriers and WAP portals. Champagne said MotionBridge’s technology will be used to serve up targeted text ads for search, while ScreenTonic will deliver display and banner advertising.