Microsoft and Yahoo extend ad guarantee through 2013

Microsoft and Yahoo are extending their revenue-per-search guarantee through 2013 as evidence of their mutual commitment to their two-year-old search pact.
Written by Mary Jo Foley, Senior Contributing Editor

Earlier this year, Yahoo execs complained of shortcomings of Microsoft's adCenter advertising platform negatively affecting the company's financial results.

But during Yahoo's Q3 2011 earnings call on October 18, Yahoo officials said problems were diminishing. Nonetheless, in order to "create more financial certainty," Microsoft and Yahoo agreed to extend the current revenue-per-search (RPS) guarantee upon which the two agreed in 2009 as part of their overarching search partnership.

Yahoo execs said today that by the end of the company's third quarter, Yahoo had closed "nearly 30 percent of the RPS gap that existed in April 2011. The pair are working to close the remaining gap "as quickly as possible."

"Both companies remain fully committed to the success of our Search alliance and the RPS guarantee extension represents an important sign of that commitment," said Yahoo Chief Financial Officer (and acting CEO) Tim Morse.

News.com's Jay Greene has more on the Microsoft-Yahoo RPS guarantee extension from March 2012 to 2013. (As Greene notes, in Yahoo's third quarter alone, Microsoft shelled out $53 million to the company as part of the RPS guarantee terms.)

Yahoo officials also said today that Microsoft and Yahoo expect to complete the "algo" (algorithm) transition of all markets by some time in November. (The transition has to do with moving users from Yahoo Search to Microsoft search for Web, image and video across both desktop and mobile.) The transition in the Korean market still needs to happen, officials said.

In addition, Yahoo completed the paid Search transition in India this quarter and is expecting to begin transition activities for additional page-search markets early in 2012, company officials said today.

Microsoft is slated to announce its Q1 FY'2012 earnings on October 20. No doubt, the Bing and Online Services Division numbers -- which are strongly affected by the Yahoo-Microsoft search deal -- will be a top area of scrutiny.

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