Hits Snag Microsoft-Yahoo! Collaboration; Bartz Cited Microsoft adCenter Shortcomings; Hotmail Unveiled 'SwitchtoHotmail.com' for Yahoo! Mail Users

This week a couple of news items seem to suggest that Microsoft and Yahoo! are beginning to air their differences. "First, during Yahoo's Q1 FY2011 earnings call with analysts, CEO Carol Bartz said that technical issues with Microsoft's adCenter platform were largely to blame for a shortfall in revenue that was expected from the Microsoft-Yahoo […]

This week a couple of news items seem to suggest that Microsoft and Yahoo! are beginning to air their differences. "First, during Yahoo's Q1 FY2011 earnings call with analysts, CEO Carol Bartz said that technical issues with Microsoft's adCenter platform were largely to blame for a shortfall in revenue that was expected from the Microsoft-Yahoo search alliance. And second, at the same time, Hotmail unveiled a website making it easy to move your Yahoo! mail to Hotmail."

At the earnings call, Bartz said the problems have included everything from "prediction of what an ad campaign for new advertiser's going to be versus one that's been on there," to "budgets-smoothing" and "relevance" concerns.

Bartz said the adCenter problems are resulting in lower-than-expected returns per search (RPS).Yahoo! laid at least some of the blame for its showing this last quarter on Microsoft's search advertising "underperforming".

From a transcript of Bartz's remarks during the April 19 Yahoo 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're 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."

And then, in a somewhat weird kick-em-when-they're-down announcement, Hotmail unveiled a website specifically for Yahoo! Mail users to switch to Hotmail.

With SwitchtoHotmail.com, users are offered testimonials and an easy way to switch from Yahoo! to Hotmail, using TrueSwitch.