Microsoft has introduced a new dimension to online mapping with a web-based application that combines mapping, local search, virtual reality - and online advertising - in the process granting an edge to Microsoft against mapping rivals Google, Yahoo and AOL.

Microsofts unveiled Virtual Earth 3D, part of Microsoft's Windows Live Search, on Monday, allowing users to soar above 15 U.S. cities and between buildings, as in Second Life, but the photorealistic landmarks are replicas of the real thing, writes CNET. Moreover, virtual billboards float above some buildings in what is a pilot test of the ad unit. Fox, Nissan Motor, Zip Realty are among the initial advertisers.

The billboards, rendered against surfaces in a 3D environment, rotate various advertisers' ads, on which users can click to be directed, for now, to the advertiser's website. The virtual billboard unit was developed by in-game advertising firm Massive, which Microsoft acquired this year. Microsoft is also opening up the Virtual Earth 3D application programming interface to developers.

"It makes this virtual city environment capable of all kinds of advertising," including video in the virtual billboards, according to Greg Sterling of Sterling Market Intelligence. "It signals a larger trend of the internet becoming more of a visually immersive environment."