Does Microsoft hold the key to the future of advertising?

In recent months there has been a flurry of activity in the advertising technology space, not least the Microsoft bid for Yahoo. What is going on?

As the GigOM post "Who will control advertising on the web" asks:

The anticipated $80 billion in online ad spending cited by Microsoft as the rationale behind its bid for Yahoo is a big number, but how that spending will be apportioned isn’t clear.

What is clear to me is that advertising is changing but more slowly than it ought. Engagement is the new mantra as wonderfully articulated by Dan Belmont on Brandweek in his article "Define Points of Engagement". Dan cites two memorable quotes

"Today, the customer is in charge, and whoever is best at putting the customer in charge makes all the money."(Wal-Mart CMO Stephen Quinn)

"Allow consumers to help you shape the brand experience. . . . Content is no longer something you push out. Content is an invitation to engage."(Cammie Dunaway, CMO of Yahoo!)

This is a great article and well worth a read. Of course creating an engagement model assumes intimate knowledge of your audience which is the adtech companies' hunting ground. But to date the output of web reporting outfits such as Comscore, Hitwise and even DoubleClick are still fairly basic and unready for an engagement world. I was very interested to hear of the success Phorm has achieved in recent months. It's technology tracks clickstream data from ISP networks and repackages this data as business information to aid better targeting of ads. Phorm appears to have solved the critical step of forging partnerships with key ISPs and can now leverage its deep knowledge and relationships with the advertising industry to grow its business.

Keeping track of all these developments and building a picture of medium term trends and implications for changing industry structure is difficult in this dynamic space. The video below is an excellent description of the changes taking place in the market and some proposed outcomes. Pause the Sonific SongSpot in the panel on the left, and enjoy Eric Picard from Microsoft taking you through the Future of Advertising Technology.