Bekker's Blog

Blog archive

Trouble with the Yahoo-Microsoft Partnership

Microsoft has started to make some progress in search -- partly from the vast improvements to both its search technology and strategy with the Bing relaunch, and partly from the integration deal with Yahoo.

But things don't look so rosy from Yahoo's perspective, according to comments made by CEO Carol Bartz during an earnings call on Tuesday.

"The Search marketplace is encountering some issues related to Microsoft adCenter technology," Bartz said, according to a transcript of the call provided by Seeking Alpha.

"AdCenter isn't yet producing the RPS [revenue per search] we hoped for and are confident [is] possible. Advertisers are seeing strong ROI, but technical limitations in the current adCenter platform mean the click volumes just isn't there yet. We had expected RPS to be neutral by midyear, it's now evident that it will take Microsoft longer to achieve that goal. We expect that to happen by year-end. In the meantime, the RPS [guarantee] helps protect our revenue, and our view of the long-term potential of the marketplace remains unchanged."

Bartz did say that Microsoft understands the issues and is working hard on the internals of adCenter. "They have an aggressive roadmap to bring those to the marketplace," she said. She also said that some key advertisers are pretty pleased with the system.

"The good news is that many of our most important advertisers are realizing a much higher ROI on their campaign in the combined marketplace. We see major financial, auto, retail and customers spending multiples of what they spent with Yahoo and Microsoft previously because returns have been great," Bartz said.

Yahoo is partially protected by Microsoft RPS guarantees that run for the next four quarters, Yahoo officials said.

But the adCenter problems are impacting the global rollout of the Microsoft-Yahoo integration. "As Microsoft focuses on RPS improvement in the U.S., we're holding off on transitioning more paid search markets this year. We'll transition the remaining paid search markets once we believe the changes are in place to yield the right results for our advertisers," Bartz said.

Technology integrations of this magnitude are complex, and the Yahoo-Microsoft problems sound at this point like roadbumps rather than impassable barriers. But talk of Microsoft missing partnering benchmarks must be a little alarming for Stephen Elop over at Nokia.

Posted by Scott Bekker on April 20, 2011 at 11:58 AM


Featured

  • Windows Autopilot for HoloLens 2 Hits Preview

    Windows Autopilot, Microsoft's PC self-provisioning program, is now being tested for use with the company's mixed-reality headset, the HoloLens 2.

  • Signs Point to Microsoft Charging for Use of APIs

    There are indications that Microsoft is mulling charging customers for software that uses its application programming interfaces.

  • The 2020 Microsoft Product Roadmap

    From the next major update to Windows 10 to the next generations of .NET and PowerShell, here's what's on tap from Microsoft this year.

  • Microsoft Extends Azure Hybrid Benefit Licensing to Linux

    Microsoft has expanded its Azure Hybrid Benefit licensing program to include Linux servers, particularly Red Hat Enterprise Linux or SUSE Linux Enterprise servers.