Microsoft yesterday announced its ads SDK and, more significantly, a new Advertising Exchange for Mobile. This is from Microsoft's Raj Kapoor's blog post:
[Microsoft's Mobile Ad Exchange offers] superior ad targeting, multiple purchase models and leading resellers including Microsoft’s sales force –as well as the large-scale adCenter marketplace. Specific capabilities of our Microsoft Advertising SDK for Windows Phone 7 include Demographic, Category, Carrier and Location targeting; Text and Image Units; Click to Call and Click to Web ad actions, and robust reporting on in-app ad revenue, ad inventory, clicks, CPM and sell thru rate. Our real-time, bidded mobile ad exchange enables multiple ad networks to bid on mobile inventory at the exact moment when an impression is served, increasing yield and reducing waste.
Again: real-time bidding and many flavors of targeting. Launch partners include Millennial Media, WHERE, InMobi and MobClix.
Windows 7 phones will be GSM-only at launch and for perhaps a year thereafter according to published reports. That means, in the US, no Verizon or Sprint for Windows Phones. Microsoft will thus be going head to head with Android (and the iPhone) at AT&T and T-Mobile. This may turn out to be a strategic mistake for Microsoft. However the phone will succeed or fail on its own merits.
The ad exchange as well, because it will be tied to Windows Phones, will similarly succeed or fail on the basis of their sales. Despite hype and promise Microsoft's PC-based exchanges (plural) have seen limited succeess to date to my knowledge.
The future of mobile display advertising inevitably includes integration with PC display, at least from a network or exchange standpoint. Microsoft would be smart to try and link mobile and PC display buying together now to broaden its market (if that's technically feasible).
Microsoft is ahead of the rest of the industry with this new exchange and its apparent capabilities. However it may see only limited adoption if Windows Phones don't prove to be a big hit.