The agreement forms part of the software company's $240m (£117m) acquisition of a 1.6% stake in Facebook, which has almost 50m users worldwide. Microsoft plans to acquire the stake during Facebook's next round of financing as part of a strategy that will see the two firms extend their existing advertising agreement.
Microsoft is already Facebook's exclusive provider of banner advertising in the US. However, the new agreement will see the online heavyweight become the social network's sole partner for third-party advertising on an international level.
It is not known whether the agreement will include sponsored search listings; this could potentially leave the door open for Facebook to forge an exclusive search partnership with Yahoo! or Google.
The Microsoft investment values the social networking site at $15bn (£7.3bn). Research from conScore shows that membership of Facebook grew by 6% in September, compared with 1% for rival MySpace, which has 107m users globally.
Facebook is to expand its commercial offering in the UK following the appointment of Yahoo!'s Blake Chandlee as sales director.
This article was first published on Marketing