Digital advertising will continue to grow strongly for the next four to five years, driven by online video and emerging markets, a Microsoft executive said on Wednesday.

The rise of mobile devices such as computer tablets and smartphones is creating opportunities for advertisers who are now able to follow their customers throughout the day.

"I am quite optimistic that for the next four to five years there will be pretty strong growth in digital advertising in emerging markets and elsewhere," said Darren Huston, corporate vice president, global consumer and online for Microsoft.

He cited Latin America, Turkey and southeast Asia as growth areas.

Microsoft, which recently signed agreements with Facebook and microblogging site Twitter, expects to see social networks and online video ads to keep developing, Huston said.

"Online video is very hot. It's gone from when nobody wanted to advertise on it to now (when) there is not enough online video inventory for a lot of the big advertisers," Huston told Reuters at the Cannes Lions international advertising festival.

Microsoft is working with Hewlett-Packard (HP) and other technology companies to create a tablet computer to rival Apple Inc's iPad and sees offering more functionality as key.

"We believe that ultimately people are going to want ... something with full computer functionalities versus partial computer functionalities," Huston said, adding no launch date had been set yet.

"Smart devices generally are a good opportunity for Microsoft: they need better software and that's what we do," Huston said.

The head of UK chip designer ARM Holdings, whose chip designs power 90 per cent of the world's smartphones and a quarter of its electronic devices, said last week he expects to see a wave of tablet computers beyond the iPad as the new devices begin to eat into traditional notebook PC sales. – Reuters