Microsoft is moving into the TV advertising realm with the acquisition of Navic Networks, which specializes in delivering targeted, interactive ads to users of digital cable set-top boxes.

Navic Networks, based in Waltham, Mass., will become a subsidiary of Microsoft's growing Advertiser and Publisher Solutions Group, which is also focused on targeted Internet advertising. Microsoft did not disclose terms of the deal.

The acquisition is a logical extension for Microsoft, which already offers a platform for cable service providers to deliver TV programs over IP networks through its Mediaroom software.

The move also puts Microsoft head-to-head again with Google, which has launched services for placing both radio and TV ads.

One of the main thrusts of Navic's software is to keep consumers' attention by delivering ads that are relevant to a specific audience despite the increasing ability of viewers to avoid advertisements.

Navic's software can do that by collecting a variety of metrics on viewers. The company's HyperGate Transport can track what programs a digital cable set-top box user has seen, collect demographic information and record what advertisements have already been viewed. No personal information is collected or aggregated, according to information on Navic's Web site.

Based on that information, advertisers can then book campaigns aimed at audiences with certain characteristics using a Web-based interface called Admira Optimized Media. That software can manage the scheduling of ads and budgets as well as deliver performance reports.

Interactive ads can keep users engaged longer. Navic's technology can add overlays to TV ads, where users can press a button on their remote control and be linked to an on-demand video or to another analog or digital TV channel with more information about a product.

Polls or trivia questions can also be overlayed to keep users' attention. The results from a poll can also be fed back to the advertiser and used to sculpt more finely-tuned campaigns to groups of viewers. With demographic tracking, information on related local services can be shown on an overlay that's based on the theme of the ad already being shown.

Navic Networks' software is currently being used to delivered ads to around 35 million digital set-top boxes in North America.

The IDG News Service is a Network World affiliate.