To keep up with Google and Yahoo, Microsoft will invest heavily - $1.1 billion on its MSN online business in 2007, compared with the $500 million spent in 2005 - CEO Steve Ballmer said, writes Smart Money (via MediaBuyerPlanner). "We will invest as much on this online opportunity as any of the other bigger players in the market," Ballmer told some 700 advertising executives at Microsoft's Strategic Account Summit for advertisers.

Yesterday's official launch of Microsoft's online ad delivery and auction system, adCenter, signified an important step in Microsoft's becoming a better search/advertising competitor to internet giants Google and Yahoo. The company will also invest in developing new online content, more efficient global networks, local search services, and new technologies to make its online advertising more effective.

Microsoft is trying to build up the MSN and Windows Live online-services businesses to match the scale of Google, Microsoft's chief advertising strategist, Yusuf Mehdi, said in an interview. It will therefore consider larger acquisitions than it has made in the past, he said.