Microsoft buys mobile ad company ScreenTonic

Microsoft will buy Screentonic, a company that specializes in delivering localized ads to mobile devices

Microsoft said on Thursday it will buy ScreenTonic, a company that specializes in delivering location-based ads to mobile devices.

ScreenTonic, based in Paris and founded in 2001, will become part of Microsoft's Digital Advertising Solutions group, created in September 2006 to sell advertising across its devices such as the Xbox gaming system and its Web sites.

ScreenTonic's platform, called Stamp, enables delivery of text or banner links on portals, ads in SMS (Short Message Service) messages and ads in mobile Web pages that vary depending on where the reader is located.

The platform includes a manager component, which can handle monitoring, billing and reporting, and a server that delivers ads according to certain criteria, according to ScreenTonic's Web site. It also has a sales component for developing and selling ad campaigns.

The technology is a brand-new addition for Microsoft, which had not done any development in mobile advertising, said Chris Dobson, vice president of global sales for Digital Advertising Solutions.

The ScreenTonic acquisition is a long-term bet in an area that Microsoft expects will grow as download speeds pick up through wider use of 3G (third-generation) and HSDPA (High Speed Downlink Packet Access) technologies, he said.

"We sort of see a parallel world mimicking the way the online space has developed, but it's at a very early stage," Dobson said.

Then, Microsoft may be able to offer consumers free content in exchange for viewing ads, a trade-off that has worked well in the PC area, Dobson said.

Microsoft won't rebrand ScreenTonic and instead take a hands-off approach, letting its founders, who will stay with the company, keep it on course, Dobson said. Many of ScreenTonic's clients, such as Vodafone Group, are already Microsoft partners, he said.

ScreenTonic said it has also worked with Apple, Nokia and Nike in addition to European telecommunications operators in Belgium, France and the U.K.

Last year, ScreenTonic announced it had gained US$7.4 million in new funding from investors 3i Group and I-Source Gestion, while also opening a subsidiary in London.

The companies did not disclose the terms of their deal.