Microsoft in the ad business for the "long haul"

While Google Inc. (NASDAQ: GOOG) continues to make profits hand over fist in the internet advertising game, competitors Yahoo! Inc. (NASDAQ: YHOO) and Microsoft Corp. (NASDAQ: MSFT) continue to make slow but sure gains in the same space. While many an industry pundit has labeled those efforts by Yahoo! and Microsoft a failure, they really are not.

It's true the internet advertising growth at the two companies is not nearly as successful as it is at Google these days, but the companies are making progress (just not fast enough for the market). Microsoft recently launched its AdCenter initiative to lull paying advertisers to it, and Yahoo!'s recent launch of its relevancy-based advertising system -- Project Panama -- continues to be touted by Yahoo! CEO Terry Semel as very lucrative for the future of the company. Meanwhile, Google's system continues to take the lion's share of money in the internet advertising space, while the competition makes what appears to be baby steps to competing on the same level.

Microsoft has acknowledged that it was late to the shift in revenue models to Internet advertising -- specifically, relevant text advertising -- but insists that it is in the advertising game for the long haul. It said as much last week during an advertising conference for its largest online advertisers. Current Microsoft co-founder and Chief Software Architect Bill Gates stated that television, newspapers and all forms of publishing are being fundamentally changed by a shift to digital media. This is pretty obvious, and the gains Google has made in each of those areas in the last few years will make it pretty hard for Microsoft to easily jump ahead. But, like the company says, it's in this for the long haul and has a cash pile bigger than almost any company in existence.

[Disclosure: I own MSFT shares as of 5-14-07]