Microsoft plans today to launch its sales service for search-engine advertising in the US, the company said. The move will open the way for Microsoft to challenge Google's model for search-advertising revenue.

adCenter will now be the sole platform serving up advertisements on MSN, Windows Live and other Microsoft websites, Microsoft said. The company has previously relied on partners such as Yahoo to sell advertising on its behalf, said Nate Elliott, an analyst with Jupiter Research.

The launch of adCenter in the US is an important milestone for Microsoft, which says it is shifting from being a software company into a provider of online media through sites such as MSN and Windows Live.

adCenter works in a similar way to Google AdWords and Yahoo's advertising platform, where advertisers set the amount they want to pay each time someone clicks on their ad. Pledging a higher fee than other advertisers delivers a higher placement of the ad on the page. The ads are displayed on pages where users search for certain words that are chosen by the advertiser.

adCenter uses a slightly more intelligent targeting system then the others, targeting ads based on user demographics in addition to the words they type into the search field, Elliott said. If it works better, advertisers will be drawn to it, he said.

However, Microsoft will have to improve the volume of users on its sites if it is to grow adCenter into a major revenue earner, he said. Microsoft "is not representing nearly as many searches as Google and Yahoo and that's their biggest problem," he said.

Microsoft first launched adCenter in France and Singapore in 2005 after announcing the development of the platform earlier last year. Some advertisers in the UK will be able to test the service starting in June, Microsoft said.

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