Microsoft (NASDAQ: MSFT) has joined up with media giant Viacom (NYSE: VIA) to share revenue and license content across its platforms -- like its online MSN and Xbox 360 platforms -- to the tune of $500 million.

The partnership will likely have an impact stretching over five years ($100 million a year) and will involve advertising in addition to content and revenue sharing during that time. Microsoft will gain the ability to get Viacom's bevy of popular content on its properties, with lucrative shows and television channels Comedy Central, MTV Networks and Nickelodeon among others.

Microsoft will also buy ads on Viacom's television networks as well as its online properties, and Viacom will most likely eventually drop Google's (NASDAQ: GOOG) AdSense platform for Microsoft's adCenter online advertising system in a blow to the search leader. Is Microsoft serious about competing with Google's stranglehold on internet advertising? This latest deal with Viacom would seem to suggest a definite yes.

Microsoft (NASDAQ: MSFT) will be rolling out new tools and services soon to encourage more internet advertisers and producers to create better online ad campaigns, the software giant said this week. Naturally, the new tools will work with Microsoft's adCenter and Live Search environments. With competitor Google (NASDAQ: GOOG) collecting the lion's share of online advertising revenue, will these newer tools make a dent in that empire?

Perhaps a little. Nothing new here -- Google and Yahoo (NASDAQ: YHOO) tools are designed to work with their own search engines and related properties as part of an advertising customer recruitment and retention strategy. But, from looking at these tools, I'd hardly call them revolutionary.

One of the newer tools, which is being described as an "adCenter Add-in for Excel 2007," allows search ad customers to research the effectiveness of ad keywords by reach and targeting efficacy. If this just imports adCenter data into Excel, then this is a non-product. If the product imports adCenter data into Excel and performs a huge massaging of data to give specific suggestions to the Excel-using adCenter customer, then this is a good thing.

But it will take more than that for Microsoft to burst through the 10.3% market share stat it gleaned in September, compared to 57% for Google.

[Disclosure: I own MSFT shares as of 12-4-07]

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]

Google's AdWords program is the complete reason for its financial success. The text ads that show up next to each Google search bring in billion of dollars in revenue every quarter. What had made them so successful? Google's search engine serves the customer with the most relevant search results as fast as possible -- and customers have noticed. This is why Google enjoys the search leadership position it does. Meanwhile, along for the ride is Google's bread-and-butter revenue maker, which also is very relevant to the consumer while being an "unobtrusive" advertisement.

Microsoft and Yahoo! have been blindsided by Google's success, but both are determined to get back in the game or die trying. But, is Microsoft so bold as to try and nip at Google's heels these days instead of Google taking ever-more market share in the web search arena? Some industry analysts think this, and postulate that Microsoft's commitment to use $2 billion to get a better foothold into web advertising is proof.

There is always a "first mover" advantage to any company who creates a certain market then continues to build brand awareness and dominate that market with a superior product. So, can Microsoft really lead up to worthy competition in web advertising with Google? I agree with the analyst statement that "The No. 1 threat to Microsoft is decreased relevance of its core products," which includes things like Web 2.0 technologies and Ajax Web development that simulates installed software in a web browser. With Google's "first mover" advantage and its willingness to try and position itself as the largest advertising network on the planet, does Microsoft have a chance?

[Disclosure: I own MSFT shares as of 4-27-07]

After liveblogging the Microsoft Q2 earnings call last week, I was surprised to hear some of the half-hearted answers from CFO Chris Liddell regarding the poor performance of Microsoft Corp.'s(NASDAQ:MSFT) search advertising business, as it actually lost marketshare in its last quarter to Google, Inc. (NASDAQ:GOOG). No surprise there -- as Google still offers a more compelling platform for many -- but wasn't the Microsoft "AdCenter" platform and the Windows Live search platform designed to take on Google?

So far, it isn't happening at all. CFO Liddell danced around analyst questions about the slowing growth of Microsoft's search advertising business and slow-growth prospects for this year like a Spanish bullfighter. The furor over today's release of Microsoft's Windows Vista operating system and the all-new Microsoft Office will calm down in time and investors will want to know just how long Microsoft's consumer cash cow franchises can keep up the growth.

Search advertising, when done correctly, can lead to huge revenue piles and a very sustainable business model (ask Google). But coming late to the party and trying to take marketshare --- even when you're Microsoft --- is not a slam dunk at all. So, I'm interested to hear how the Redmond juggernaut plans to get more into the game here.

After having used Microsoft's new Live.com search and portal platform for the last day or two, I can say that Microsoft has done a pretty decent job of re-inventing its wheel around the enormous Google threat, which Microsoft is now constantly having to battle. But Ole' Softie will have one heckuva time trying to out-seat Google in the Internet search field anytime soon. Google's pervasiveness and brand power were there first and have increased to such a consumer mindshare level that I'm not sure any company can wrestle that crown away.

But Microsoft probably has no choice, it must complete in this arena. And as a MSFT shareholder I hope it can hold its own. It's off to a good start, but how is Microsoft going to recruit Google-ites to the new Live.com? Even though Microsoft has under 10% of the search market -- so what? The 465 million users to its MSN search site in July, according to Nielsen NetRatings, make the Google-like new Live.com portal very important. After all, Microsoft, and Yahoo! for that matter, don't really need to catch up to Google in order to glean nice revenues from search advertising.

The hundreds of millions of monthly visitors both Microsoft and Yahoo! receive each month easily makes it pretty clear that having a monetized search engine is key. And, the new Live.com site looks so much like Google it's eerie -- but Google has proven that simplicity and streamlined approaches work wonders. Add that with highly-relevant and targeted advertising that doesn't anger your customers and the recipe for success becomes pretty apparent. But, I just don't see either Yahoo! or Microsoft beating Google at its own game any time soon.

[Disclosure: I own MSFT shares as of 9-13-06]