Microsoft Corp. today revealed that it has acquired Spotfront Inc., a New York startup that does business as PromoteIQ and provides ad management technology for retailers.

The terms of the deal were not disclosed. PromoteIQ listed 41 employees on LinkedIn before taking its page offline and has raised more than $6 million in private funding.

PromoteIQ helps retailers generate advertising revenue through their e-commerce websites. The startup’s namesake cloud service enables merchants to set aside space in their product catalogs and put it at the disposal of suppliers looking to raise awareness about their merchandise. A maker of iPhone accessories, as an example, might place ads in the Apple section of an online electronics marketplace.

PromoteIQ displays ads as regular product listings to avoid detracting from consumers’ shopping experience. On the backend, the service provides management tools that retailers can use to optimize their ad inventory and analytics features for measuring the effectiveness of promotions.

The startup has racked up several major customers since launching in 2012. Home Depot Inc., Kroger Co. and Kohl’s Corp are among the brands that use PromoteIQ in their e-commerce sites.

The acquisition of PromoteIQ should boost Microsoft’s efforts to grow its presence in the retail technology market. Shelley Bransten, the technology giant’s corporate vice president of global retail and consumer goods, said earlier this year that it’s “seriously considering” to take on Spotify by building a rival e-commerce platform. PromoteIQ could theoretically become part of this platform if and when it launches.

The service may also presents new revenue opportunities in its current standalone form. Microsoft could offer PromoteIQ to Walmart Inc., The Gap Inc. and the other traditional retailers that are choosing its Azure cloud platform to support their technology initiatives.

Microsoft’s gains in this vertical can be attributed partially to the reluctance of some retailers to use Amazon Web Services. Parent company Amazon.com Inc. competes with many of the bigger brick-and-mortar chains that have signed up for Azure over the past few recent quarters. It’s also a major force in the e-commerce advertising market thanks to a growing ad business that generated revenues of about $2.7 billion last quarter.  

PromoteIQ is set to become part of the Microsoft Advertising group. Rik van der Kooi, the head of the division, wrote in a blog post that the startup will continue to operate under its current brand.

Photo: Microsoft