Microsoft’s long awaited contextual advertising platform, named ContentAds, sent out the first invitations today to prospective participants in its pilot program. Starting on “primarily” (their word) MSN owned sites, Microsoft says that ContentAds will place advertisements using not just keywords but also demographic targeting, geo-targeting and incremental bidding tools. Sounds like AdSense plus some consideration of the demographics of various MSN sites’ readership - we’ll see what happens when ContentAds are released into the wild. We’ll probably see soon.

More big time competition for Google’s AdSense, Yahoo! Publisher Network and the other players in the field should mean higher revenue cuts for publishers and more innovation in the way ads are served. That’s the theory anyway, though Microsoft’s late and safe entry into the game leaves open the question of whether there will be much innovation here. Come on Microsoft - surprise us!

Online ad expert Jennifer Slegg, who got an invitation, broke the news (I found via) and predicts Microsoft’s entry will be especially good news for small publishers without millions of impressions per month.

Microsoft announced what was probably a huge advertising deal with Facebook just last week.

TechCrunch Tuesday, August 29, 2006