Microsoft Earnings: Display Ad Revenues Tank on Lower Prices

Microsoft’s online ad revenue declined 13 percent during the quarter just ended as display ad prices continued to fall. Execs said the company now expects advertiser demand to remain weak for at least the next quarter, and possibly for the coming year.

Ad revenue came in at $529 million, $86 million less than the year-ago period. The decline might have been worse if not for growth in pag eviews, investor relations GM Bill Koefoed said yesterday during the company’s earnings call.

Overall, Microsoft’s online services business unit, which houses MSN, Bing, and Microsoft’s other online ad-related businesses, saw revenue decline $106 million. Operating loss was much greater than that at $732 million, partly because of increased traffic acquisition costs such as those paid to publishers and other syndication partners.

Microsoft’s biggest online initiative for the quarter hands-down was the launch of its new search brand. According to the company unique monthly audience to Bing.com grew 15 percent during the period. Despite the growth, Koefoed said search revenue was flat. That may be attributable in part to a decline in the number of ads being served on search results pages. Earlier this month search marketer AdGooroo observed a significant decline in first-page ads when Bing replaced Microsoft Live Search at the beginning of June.

“We’ve seen particular strength in the areas of shopping and travel,” said Koefoed. He said visitors to Bing Shopping almost tripled while Bing Travel traffic was up 90 percent in the month after its launch.