Microsoft has upped the ante in the battle for the multi-billion-dollar internet advertising market by switching to a propriety platform it says will target audiences more accurately than its rivals.

Later today, Steve Ballmer, the Microsoft chief executive, will tell advertising executives gathered at the Annual MSN Strategic Account Summit in Redmond that the plans are integral to Microsoft’s "evolution from a software company into the world’s largest, most attractive provider of online media".

The new Microsoft advertising network, called adCenter, will enable users to advertise through the company’s flagship American MSN site in addition to other platforms such as the Xbox games console.

In the broader market it will compete with Google’s Adsence service, the current leader.

Formerly, Microsoft’s advertisers went through rival Yahoo’s system.

Microsoft has been working on adCenter for at least a year and hopes it will allow it to leapfrog its rivals. The tool will target adverts according to audience demographics, geography and time of day - as well as the content on the web page where they appear, a feature that will set it apart from Google and Yahoo.

In a memo written to employees last week, Steve Ballmer, the Microsoft chief executive, said that the "further growth of adCenter is key" to taking on Google.

In a move that signals how Microsoft hopes to exploit the massive reach it enjoys through its position as the world’s largest software maker to cut Google’s commanding lead in the sector, adCenter is also expected to give advertisers access to formats ranging from the Xbox 360 games console to mobile handsets that run on its Windows operating platform.

"Microsoft adCenter is designed to ultimately provide advertisers a one-stop-shop experience, whether buying search, contextual, or display ads across a number of Microsoft properties," the company said.

The UK trial of Microsoft adCenter will begin with a limited number of advertisers across several key sectors in June, Microsoft said. A full launch is planned for the second half of 2006.

Mr Ballmer is expected to detail the plans later today in a presentation to advertisers in the United States.

The move follows a cool Wall Street reception to Microsoft’s spending programme.

Shares in the company fell sharply last week, recording their largest intra-day decline for more than five years. The slump came after Microsoft sketched out plans to invest some $2 billion more than had been anticipated to take on a growing band of competitors.

These include electronics groups Sony and Apple, internet companies such as Google, and Linux software.

The company was also hit by research that showed Microsoft’s search business has recently lost market share in the key US market, falling to 11 per cent from 14 per cent, while Google increased its share to 49 per cent.

However, earlier this week, Microsoft scored a significant victory over Google when it won a high-profile contract to power search functions on Amazon.com, the world’s largest online retailer.

The Amazon deal, the details of which have not been disclosed, will involve Microsoft’s next-generation Windows Live technology, which focuses on delivering web-based products, and will compete with incumbents including Google and Salesorce.com.

Google has also ratcheted up its offensive strategy, in part by making an informal approach to US and European competition regulators over the way Microsoft intends to promote its search service through its Internet Explorer web browser.

MSN attracts more than 465 million unique users worldwide per month and is available in 42 markets and 21 languages.

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