How The Microsoft and Yahoo! Search and Ad Deal Is Doing

Posted Apr 20, 2011

Earlier this week Yahoo! Inc. (NASDAQ:YHOO) did their Q1 FY2011 earnings calls with analysts. Yahoo! CEO Carol Bartz talked about how there were technical issues with the Microsoft adCenter platform that caused lower than expected revenues.

As part of the search and ad deal that Yahoo! made with Microsoft, Yahoo! moved their advertising partners from their Panama ad platform to the Microsoft adCenter. Since there are some issues with adCenter, Yahoo! decided that they are ?holding off on transitioning more page search markets this year.?

Below is a transcript from Bartz’s talk from the call:

?adCenter isn?t yet producing the RPS we hoped for and are confident as possible. Advertisers are seeing strong ROI (return on investment), 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 guaranty helps protect our revenue and our view of the long-term potential of the marketplace remains unchanged.

?We are working very close with Microsoft on this. They understand the issues and they?re hard at work on systems architecture, science models and better features and functions in adCenter. They have an aggressive roadmap to bring those to the marketplace.?

Microsoft said that they plan on working aggressively at fixing the RPS gap. Microsoft also said that they plan on improving monetization, relevance, and advertiser-facing tools.