ft.com/techblog

Buried in Microsoft’s latest quarterly earnings is some surprisingly positive news about efforts to turn around the struggling online services division. Sure, this is long overdue (see Site under construction, please return next year.) The gap with Google is still getting bigger. But at least it shows that not all hope is lost.

Apparently, Microsoft’s online advertising revenue rose 23 per cent in the latest three months. The display business grew in line with the market as a whole.

More importantly, Microsoft’s AdCenter is finally starting to click. According to Chris Liddell, chief financial officer, Microsoft is now generating higher revenue per search from AdCenter than it was getting a year ago when it relied on Yahoo’s platform (though that statement demands to be qualified. Yahoo’s monetisation engine was performing woefully at the time. Also, Microsoft was giving some of the revenues to Yahoo, so it wasn’t getting 100 cents on each dollar of advertising sold, unlike now.)

There have been other slightly more positive signs in recent weeks. An alarming slide in Microsoft’s share of the search business, which took hold late last year, seems to have been halted.

Microsoft still faces a huge uphill task if it is to get anywhere near to even thinking about catching up with Google. But at least it’s a start.

April 27th, 2007 in Internet | Permalink