Overseas Weakness Hurts Microsoft's Ad Business

  |  January 29, 2010   |  Comments

Company had a record quarter, no thanks to display and search sales.

Windows 7 was the star of a Microsoft's second fiscal quarter, with company executives spending a lot of time boasting, during an investor call, about how the new operating system played a big part in the quarter's record revenue and record profit.

But when it came time to talking about Microsoft's online services division, which houses the company's Internet advertising businesses, Microsoft General Manager of Investor Relations Bill Koefoed and new CFO Peter Klein hit the gas pedal and sped past. There were only a few areas of Microsoft that didn't have a good second quarter, and online services was one of them.

Even though Microsoft's new search engine, Bing, is gaining traction, the online services division's $581 million in revenue represented a 5 percent decline from the prior year. Executives expressed confidence the ad business will improve. "The outlook for online advertising appears to be improving," Klein said. "We expect revenue to be roughly in line with the market for the third [fiscal] quarter and the full year."

Koefoed cited the overseas economic situation as having a negative impact on display ad sales. "While search revenue grew, display revenue was hampered primarily by international rate declines," he said.

Much of the online division's fate could rest in the outcome of its pending partnership with Yahoo. Koefoed mentioned Yahoo, but only very briefly. "Regarding our Yahoo partnership, we are still working through the regulatory review process and continue to be hopeful the deal will be approved early this year," he said.

Although it didn't rise to Windows 7's level of stardom - the execs said record sales of the OS were a huge part of its 60 percent increase in quarterly profit - Bing got a pat on the back. "We continue to be pleased with Bing's momentum to date, including seven consecutive months of share gains in the U.S.," Koefoed said.

Nevertheless, Klein said Bing's success will be a "long-term process."

pro-rank-tracker-logoPro Rank Tracker is a cutting-edge ranking tracking tool for keeping you up-to-date with all the latest changes in the rankings of your websites and videos.


COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.



Featured White Papers

US Consumer Device Preference Report

US Consumer Device Preference Report
Traditionally desktops have shown to convert better than mobile devices however, 2015 might be a tipping point for mobile conversions! Download this report to find why mobile users are more important then ever.

E-Commerce Customer Lifecycle

E-Commerce Customer Lifecycle
Have you ever wondered what factors influence online spending or why shoppers abandon their cart? This data-rich infogram offers actionable insight into creating a more seamless online shopping experience across the multiple devices consumers are using.




  • SEO Specialist
    SEO Specialist (Marcel Digital) - ChicagoSearch Engine Optimization (SEO) Specialist   Marcel Digital is an award winning digital marketing...
  • SEO / SEM Manager
    SEO / SEM Manager (CustomInk) - FairfaxAre you a friendly, motivated, and inquisitive individual? Are you a positive, out-going leader? Are you...
  • SEO Analyst
    SEO Analyst (XO Group) - New YorkSEO Analyst @ XO Group About this Job, You and Our Team: The XO Group SEO Team is looking for you, a passionate...