By ROBERT A. GUTH
June 16, 2008; Page B5
Microsoft Corp. is getting help from start–up YuMe Inc., which specializes in serving advertisements to online videos, as it tries new ways to gain a larger slice of the online ad market.
The Redmond, Wash., software maker this month will begin using a YuMe service to place ads in videos running on Microsoft Web properties, executives at the two companies said.
YuMe, based in Redwood City, Calif., helps match advertisements with online videos. The company has a small sales force that works with advertisers to build ads that feed into a network –– run by YuMe –– of Web sites with videos, such as NBC Universal’s NBC Direct site, and a host of smaller independent Web sites. (NBC Universal is a unit of General Electric Co.)
YuMe also uses a small software program downloaded onto a consumer’s computer that helps the company analyze which ads would be best suited for a given video. The YuMe service then can automatically serve an ad with the video.
Financial terms of the agreement weren’t disclosed. The deal adds Microsoft Web properties, including MSN’s online sports and entertainment videos, to the YuMe network. Microsoft will use the network when the popularity of a video –– such as Super Bowl ads or a hot news story –– causes a spike in traffic and demand for ads that Microsoft’s own ad service can’t meet, said Rob Bennett, a general manager at Microsoft’s MSN online group.
The relationship is one step in Microsoft’s broader effort to increase online ad revenue in areas that aren’t dominated by Google Inc., which holds the biggest share of ads tied to Internet search results. Google, meanwhile, is in the early stages of trying to find ways of using its popular online video site YouTube as a source of advertising.
Microsoft last week watched its biggest move in online advertising –– a proposal to buy Yahoo Inc. –– fade as the Internet company teamed with Google instead. Microsoft is left now to forge relationships with smaller players that can complement its online business. YuMe is one example of that.
"We’re going to continue to invest more deeply" in online video ads, Mr. Bennett said.