Microsoft has strengthened its strategic alliance with Facebook, signing a deal that will make the software developer the exclusive third-party advertiser for the social networking site.
Microsoft will take a 1.6 per cent stake in Facebook at its next round of financing that will be worth $240 million and will place its search engine, along with search-related advertising on the social network website.
Last year, the companies announced a US-only alliance that made Microsoft the exclusive provider of banner advertising for the website. The latest deal is an expansion on this arrangement and comes at a fortuitous time for the two companies.
Microsoft is under pressure to break in to the internet search service market after its recent failure to take over Yahoo. This deal will guarantee it more traffic, which will boost the effectiveness of its search technology and deliver more relevant advertising to users.
Facebook, which has recently become the world largest social networking site, has been struggling to prove to investors that it can provide new sources of revenue. The FT has reported that the company is now projecting sales of around $350 million for this year, up from about $150 million last year.
Kevin Johnson, president of Microsoft’s platforms and services division said: “Making this investment and expanding this partnership will position Microsoft and Facebook to better take advantage of advertising opportunities around the world, and is a great win for not only our two companies, abut also our collective users and advertisers.”