Microsoft to snap up mobile ad company

Microsoft has agreed to acquire European mobile phone ad company ScreenTonic to try to gain a foothold in that rapidly growing market.

Microsoft, the world's largest software maker, did not disclose the financial terms of the deal announced on Thursday. Paris-based ScreenTonic is one of the first companies in Europe to develop a platform to manage and place ads on the mobile internet.

ScreenTonic also serves as an advertising agency for companies looking to develop marketing campaigns on phones. Investors in the start-up include venture capital firm 3i and I-Source Gestion, according to ScreenTonic's website.

Mobile-phone advertising is still a nascent industry compared to web advertising, but it is an area being targeted by Microsoft and web rivals Google and Yahoo.

Advertising on the internet, especially pay-per-click ads alongside search results, erupted into a multibillion industry within a few years and online companies hope mobile phones will follow a similar growth trajectory.

"The acquisition of ScreenTonic will be part of our long-term strategy to deliver ad experiences that map to [the mobile internet]", Steve Berkowitz, senior vice president at Microsoft's online services group, said in a statement.

ABI Research forecasts that global mobile marketing and advertising will increase sixfold to $19bn by 2011 from an estimated $3bn by the end of 2007.

Google, the web search leader, has built a dominant online advertising business around its search engine and strengthened its position by agreeing to acquire online ad supplier DoubleClick for $3.1bn last month.

Microsoft, slow to recognise the power of web advertising, has been playing catchup by building its own search engine years after Google and developing its ad-placement system. Its online advertising is still dwarfed by Google.

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