Microsoft has paid close attention to the apparent early success of Apple’s iAd platform and it would like a piece of the action.

In fact, it believes its new Windows Phone 7 ad platform will be the best thing since sliced bread–seriously! It’s calling the platform “Toast!”

Windows Phone 7, due out for the holidays, will allow advertisers to push notifications about their products to people’s phones through a platform called “Toast.” Even when a company’s app is not active, a small ad box can slide down from the top of the phone’s screen to alert the user there’s an update or new offer from that brand.

So, is this a clone of Apple’s iAd? Nah, Microsoft has learned that its mobile platform is not strong enough to directly compete with the iPhone. Instead, Toast will work differently. Instead of in-app ads, Toast will rely on pushing ads to the user–even when the app is not currently active.

I know that many Pilgrim’s just shuddered at the thought of Windows pushing unwanted ads to their phone’s screen, but you’ll be able to opt-out. And, keep in mind, these ads are only shown if you download a company’s app, so either uninstall it, or accept that it’s a small price to pay for free apps.

Of course, both Toast and iAds are unknowns at this point. Sure, we know the technical specs, but what we don’t know is whether mobile phone owners will accept and react favorably to these types of ads. I guess we’ll find out by the end of the year.

Watch the video below for more info on Toast.