Microsoft will work more closely with small businesses and interactive agencies, offering itself up as “the local operating system,” according to Randy Wootton, Microsoft Advertising VP of global search and online marketplace, who addressed BIA/Kelsey’s DMS ’10 conference today in Dallas.

Wootton said that Microsoft was one of only two companies that had the wide-ranging platform that could meet all today’s SMB media needs — the other apparently being Google. “We can support consumer experiences across any device supporting queries with geographic intent,” he said, noting that it goes beyond monetization via the Ad Center to also include Microsoft’s local business portal services, mapping platform and even its Xbox game platform — the “only truly cool thing that Microsoft owns,” Wootton joked.

Microsoft sees tremendous opportunity in the SMB channel. Eight billion dollars is likely to be spent on Web sites by 2013, and $15 billion altogether. The company is already well-positioned via its “search alliance” partnership with Yahoo, which handles 30 percent of the overall marketplace. It also has strategic partnerships with IYPs such as SuperMedia, YP.com and Dex One Media,” noted Wootton.

Research commissioned from Bain & Co. by Microsoft supports his thesis. Twenty-five percent of SMBs use partners; 35 percent of their total spend is indirect. Those that use channel partners spend 8X those that don’t.