Oct. 19 (Bloomberg) -- Microsoft Corp. Senior Vice President Brian McAndrews said too much emphasis is put on Internet-search advertising, predicting that more buyers will switch to other kinds of online ads.

Microsoft, trounced by Google Inc. in the Internet-search market, gets the bulk of its advertising revenue from so-called display ads -- banners, video spots and other graphical promotions. Because Google is newer to display ads, Microsoft may benefit if more buyers embrace the format.

``Search has been a significant driver of growth'' for the online ad industry, said McAndrews, the head of advertising and publishing at Redmond, Washington-based Microsoft. ``In the next several years, it will not be as much of a driver. Some of the emphasis will shift more toward display ads, toward video, toward rich media.''

Graphical ads are becoming more important as big-brand advertisers spend more of their budgets online, he said. Such companies want videos and banners that closely resemble what they use in television and print advertising. Search ads, in contrast, are typically four lines of text positioned near query results.

Google plans to make gains on Microsoft and Yahoo! Inc. in display advertising through its purchase of DoubleClick Inc., which helps place graphical ads for customers. Google also is relying on the video site YouTube, acquired last year, to put more ads in and around movie clips. Customers are starting to use its multimedia advertising formats at a faster rate than expected, Google Vice President Marissa Mayer said this week.

Microsoft shares fell 99 cents, or 3.2 percent, to $30.17 at 4 p.m. New York time in Nasdaq Stock Market trading. They have risen 1 percent this year.

AQuantive Purchase

To boost its ad business, Microsoft acquired McAndrews's company, AQuantive Inc., for $6 billion in August. Microsoft generated $1.84 billion in ad revenue in the most recent fiscal year, a seventh of Google's.

Search is probably already given too much credit because of the way the effectiveness of ads is measured, McAndrews said. When an online transaction takes place, the sale is attributed to the last ad viewed, which is most often a search ad.

For example, if a customer sees a banner promoting a product on Microsoft's MSN and watches a related video on Time Warner Inc.'s AOL and then searches for the brand on Google before making a purchase, only Google gets paid for the sale, he said.

Microsoft, the world's largest software maker, is working on a system called ``conversion attribution'' that would dole out credit to other sources that influenced the buyer's decision. McAndrews expects that system to replace the current one, which was originally developed by AQuantive. The effort would reduce the importance of search.

``Since search logically is often the last thing people do, it's arguably getting more credit than it deserves,'' he said. ``It's probably being overvalued now. Our studies show that it is.''

To contact the reporters on this story: Fred Fishkin in San Francisco at ffishkin@bloomberg.net; Dina Bass in Seattle at dbass2@bloomberg.net

Last Updated: October 19, 2007 16:20 EDT