Microsoft adLab and targeted ads

It is being widely reported that Microsoft announced their new research group for advertising, Microsoft adCenter Incubation Lab (adLab).

From the press release:

Today at the adCenter Demo Fest on the Microsoft campus, the researchers gathered to present prototypes ... [that] promise to change online advertising dramatically in areas such as paid search, behavioral targeting and contextual advertising.

adLab will be headed jointly by Ying Li, Ph.D., of Microsoft adCenter in Redmond and Jian Wang, Ph.D., of Microsoft Research Asia in Beijing, and will consist of a team of dedicated scientists with specializations in the areas of data mining, information retrieval, statistical analysis, artificial intelligence, auction theory, visual computing and digital media.

John Cook at the Seattle PI wrote, "In the next six months, the company plans to handle all of the search advertising functions on [MSN Search] ... a task that is currently outsourced to Yahoo."

The most interesting part for me is what they are planning on doing with behavioral targeted advertising.

Shankar Gupta reports:

One product scheduled for imminent release was a behavioral targeting tool that maps users' Web-browsing habits, and allows advertisers to create their own segmentation, choosing what sort of Web-goers they want to target with MSN search ads.

Allison Linn at AP gives more details:

They aim to give advertisers a better sense of the age, gender and other traits of people who are viewing certain information online. For example, the technology could give a car advertiser the best shot at reaching women over 45, or men under 25. A movie company, in turn, could be given a better chance of reaching people who are or have recently visited sites related to entertainment.

This process sounds more like segmentation -- picking ads based on categories or clusters, usually from explicitly provided registration data -- rather than personalization -- using implicit data about interests derived from user behavior -- but it certainly could be a step toward personalized advertising.

Segmentation and personalization appear to be the key differentiators for Microsoft adCenter. Mike Grehan chatted with two members of the Microsoft team:

I asked both women what they thought would set MSN apart from Google's AdWords product. They immediately focused on years of profiling, user behavior, and data mining. In short, they know a heck of a lot more about their audience than Google knows about its own.

If Google has an Achilles heel, this is it.

See also my previous post, "Kill Google, Vol. 2".

See also my previous posts, "Google wants to change advertising", "Yahoo testing ads targeted to behavior", and "Is personalized advertising evil?"

Update: Don Dodge at Microsoft posts some interesting thoughts on the future of online advertising.