Today Microsoft updated Skype to now included “Conversation Ads”. Looking at the review on Ars Technica, this is all sorts of terrible. I think Microsoft shot itself in the foot big time with this one.

The idea is that when both participants see the advertisement, they will start discussing it. These are why they are called “Conversation Ads”. I’m not sure about you, but I have advertisement blinders on these days. Sure, I see them subconsciously, but I don’t click on them. If I don’t click on them, the most I’m likely to do is mock them. That’s not good for the advertiser.

Skype used to be the big boy on the block when it came to VOIP calls. Vonage was the consumer giant, but more and more people went with Skype. About five years ago Grand Central was purchased by Google. This placed Google right into the thick of the VOIP battle. They rebranded the product Google Voice. I’ve loved it since it was Grand Central.

Thanks to Google Voice I have done almost every conference call from home through my laptop. I didn’t have to use my phone at all. This is important because depending on when the call started it could severely kill my cell phone minutes. I would even pay for Google Voice, but thankfully I don’t have to.

From a video call perspective, things get more interesting. Skype was one of the first mainstream video call solutions. Quite a few podcasters have used the video and audio portions of Skype for their shows. The big one of course is Twit.tv. Recently because of performance issues Leo has told his TWIT guests not to update Skype. I’m sure with this new ad format they may just drop it altogether.

For the one-on-one video calling space, Facetime is my biggest tool. My son and I have made video calls with my grandmother with it. He loves video calling. This is the type of use he is going to grow up with. He is never going to know what Skype is.

When you need multi-person video conversations, then Google Hangouts seems to be the best option. Since Hangouts allows you to have ten people video chatting at a time it is the superior choice at the moment. Skype can support ten but recommends four or fewer. Your hangouts can also be published to YouTube – this makes it an instant podcast creator. To do similar functionality in Skype you had to use third-party tools.

I’m sure there are some Skype die-hards out there that will stick with the brand. There are also folks that still rent their phone from the telephone company. Microsoft has tried to justify the Skype purchase so much that they had to monetize it somehow. The freemium model is not really in Microsoft’s vocabulary. I think this was the wrong path to take. I can get the functionality I need from other trusted sources without advertising. I just don’t see myself ever using Skype again.