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Microsoft to Acquire Mobile ad Company ScreenTonic

SEATTLE (Reuters) - Microsoft Corp. (MSFT.O: Quote, Profile , Research) said on Thursday it agreed to acquire European mobile phone advertising company ScreenTonic to gain a foothold in the rapidly growing business for placing ads on mobile phones.

Microsoft, the world's largest software maker, did not disclose the financial terms of the deal. Paris-based ScreenTonic is one of the first companies in Europe to develop a platform to manage and place ads on the mobile Internet.

ScreenTonic also serves as an advertising agency for companies looking to develop marketing campaigns on phones. Investors in the start-up include venture capital firm 3i (III.L: Quote, Profile , Research) and I-Source Gestion, according to ScreenTonic's Web site.

Mobile phone advertising is still a nascent industry compared to Web advertising, but it is an area being targeted by Microsoft and Web rivals Google Inc. (GOOG.O: Quote, Profile , Research) and Yahoo Inc.

Advertising on the Internet, especially pay-per-click ads alongside search results, erupted into a multibillion industry within a few years and online companies hope mobile phones will follow a similar growth trajectory.

"The acquisition of ScreenTonic will be part of our long-term strategy to deliver ad experiences that map to the (mobile Internet)," said Steve Berkowitz, senior vice president at Microsoft's online services group, in a statement.

ABI Research forecast global mobile marketing and advertising will increase sixfold to $19 billion by 2011 from an estimated $3 billion by the end of 2007.

Google, the Web search leader, has built a dominant online advertising business around its search engine and strengthened its position by agreeing to acquire online ad supplier DoubleClick for $3.1 billion last month.

Microsoft, slow to recognize the power of Web advertising, has been playing catch-up by building its own search engine years after Google and developing its ad placement system.

Its online advertising is still dwarfed by Google.

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