Devoted to online marketing, viral marketing, and web marketing

According to Microsoft (MSFT) CEO Steve Ballmer, up to 25% of revenue generated by the company will come from advertising over the next 4 to 10 years.

The goal of the company is to put integrate its media businesses, sofware and ad serving properties to create an online ad powerhouse that will appeal strongly to advertisers who are increasingly migrating their ad spend to the Internet.

Ballmer also enthusiastically said that "All marketing will be digital sometime in the next 10 years." While that won't be the case, it does underscore the increasing growth and focus the medium has for companies. Nonetheless, Ballmer is right in that a huge portion of marketing will be Internet-based.

The venue for Ballmer's assertions was a conference in Paris on October 2 before a group of over 500 advertising clients from 17 countries in Europe. The same type they've held in Seattle the last few years.

What Ballmer emphasized at the conference was Microsoft's ability to deliver advertising across mulitiple platforms; including the Internet, mobile and in-game.

The timing is good in that Europe has lagged behind the U.S. in online advertising growth, with the U.S. receiving $19.9 billion in online advertising dollars, while Europe only spent about $8.4 billion, according to JupiterResearch. Europe is starting to grow fast though, and is an important market to get into at this point.

Probably the most important insight here is the recognition that Microsoft's growth will no longer be in the software space. While that has been known by those watching the industry for some time, the projections of Ballmer show they're adding on to their core business.

The problem Microsoft faces and will face, is the extraordinary competition they will face in this space. I think this is part of the problem they've had over the last years. When they started as a company, they took the market lead so quickly (other than Apple (AAPL) temporarily) that they never really had to think in terms of disruption and competition. All they had to do was add some incremental things to their underlying software.

Now they are in a competitive battle they've never had to face before. It's actually good for the company, but they'll have to think differently than the incremental way they've worked in the past.

It's yet to be proven whether they can make the transition or not. Announcing and asserting is one thing, executing that plan is something totally different.

This doesn't mean Microsoft will go away if they fail in this. What it does mean is they must come through in this area if they want to be competitive for years ahead. They'll always get their money from the occasional Windows update, but that won't give them growth in the future.

Microsoft is at one of the key junctures of its history. What type of company they will be will be determined over the next several years. The only way they'll make it is to start acting like a scrappy, hungry, small company that wants to make a difference in the universe. They've lost that along the way.