In a post on Search Engine Land, Microsoft reported an increase of only 8% in search advertising revenue ($124 million), in its quarterly earnings report released on July 20, 2017. Even by taking out traffic acquisition costs (TAC), Bing search advertising revenue was up 10% ending June 30, 2017. Microsoft says the bump in search revenue is due to higher search volume and improved revenue per Bing search.
Microsoft continually noted that increase was due to the “continued benefit from Windows 10 usage,” however, it appears that Bing’s ad growth rate has hit a plateau for the last few earnings quarters for Microsoft. Search Engine Land points out what happened to Bing’s growth rate stoppage, due to the renegotiations in revenue streams Microsoft and Yahoo recently underwent:
“The Q2 FY17 earnings call in January 2017, Microsoft CFO Amy Hood reminded investors that “total search revenue growth will slow now that we’ve passed the one year anniversary of our Yahoo deal and the associated change in revenue recognition.”
Microsoft is still trying to catch up in a market that Google currently dominates. While Microsoft has still developed Bing and Cortana apps for Android and iOS, Microsoft still lags far behind Google. However, even though Bing is experiencing slower growth than expected, Microsoft did announce that Bing has finally begun to be profitable in Q1 FY 2017, which ended September 30, 2016.
Bing could further see growth if Microsoft opted to push Bing, even more, search for Windows 10. While it may take some time before Bing catches up to Google in search, at least Bing is finally paying off for Microsoft.