Yahoo reported decent earnings this afternoon, but on the call CEO Carol Bartz admitted that the search business isn’t doing as well as expected since Yahoo turned over its ad platform to Microsoft.
The reason: Yahoo isn’t getting as much revenue per search as it expected.
Specifically, advertisers are seeing good return on investment and investing more, according to Bartz, but overall click volumes are down. That suggests the ads aren’t as relevant to users as they were under Yahoo’s system.
Bartz said that Yahoo is working closely with Microsoft to improve its ad platform, and expects RPS to turn positive by year’s end.
Overall, search revenues were down 19% from last year, not including traffic acquisition costs.