Microsoft has reached a deal with Flickr-competitor Piczo, a photo-sharing and networking website for teenagers, to supply online advertising for their UK site, the companies said.

The ads will be sold by Microsoft's Digital Advertising Solutions division, created in September 2006 to expand the company's online ad sales reach across its own sites and others. Microsoft hopes to replicate Google's success in the online advertising market.

Microsoft will be the sole provider of ads for Piczo, which had been using Ad2-One, said Chris Seth, Piczo's managing director. Microsoft has a 90-person Digital Advertising Solutions team in the UK, said Alex Marks, head of Microsoft's UK trade marketing.

Online advertising is "a tough market, but it's a growing market", Marks said. Microsoft is banking on advertisers who will pay a premium for niche online audiences on sites such as Piczo, he said.

Based in San Francisco, Piczo was launched in 2004. The site is for 13- to 18-year-olds. According to internet marketing researcher Nielsen/NetRatings, Piczo had around 1.5 million unique visitors in February, with about 4 percent of active UK internet users visiting the site at least once during the month.

Nielsen/NetRatings classifies Piczo as a photography site. Piczo appears in the same rankings as Flickr.com, which came in first in a list called ‘photograph brands’, in February with about 1.7 million unique visitors.

By comparison, MySpace, which Nielsen/NetRatings calls a "member community", had 5.8 million unique visitors, and about 19 percent of active UK internet surfers used the site once in February.