REDMOND, Washington: Microsoft is aiming to grab a bigger slice of the online advertising market for its news page and other sites by using data gathered from its Hotmail service.

The world's biggest software maker, which lags behind arch rivals Google and Yahoo in the web ads market, says it is hoping to improve its position by taking "behavioral targeting" to the next level, according to a report in the Wall Street Journal.

Microsoft says it has begun combining personal information from its 263 million global Hotmail users with their internet searches.

The company's head of ad sales, Chris Dobson, says marketers could better target the ads they send to computer users and avoid wasting time with irrelevant messages. The company claims that in testing in the US, behavioral targeting increased clicks on ads by as much as 76%.

The system allows advertisers to send different ads to each person. Microsoft offers the example of a 25-year-old financial analyst living in a big city comparing prices of cars online. BMW could send him an ad for a Mini Cooper, but it could send a 45-year-old suburban businessman with children an ad for the X5 SUV.

For the quarter ended September 30, Microsoft's online ad revenue rose 5%, although the company did not disclose the amount. During the same period, ad revenue at Google jumped 70% to $2.69 billion (€2.04bn; £1.37bn); at Yahoo, it rose 18% to $1.16bn.

Data sourced from Wall Street Journal Online; additional content by WARC staff