Despite the increasing popularity of social networking sites, Google (NSDQ: GOOG), Microsoft (NSDQ: MSFT), Fox Interactive and others are still having difficulty unlocking the platform’s potential ad revenue. Explaining its poor performance in Q4 last week, Google flat-out blamed its troubles on social ad inventory not paying very well, dragging down margins across the board. Although it didn’t identify any social nets by name, Google does have a $900 million ad contract with MySpace. And over at Facebook, Microsoft isn’t generating any windfalls from its 1.6 percent stake in its social net deal either. A WSJ piece points to analysts’ estimates that claim that the Redmond company is losing money on the deal. There’s a further implication that Microsoft has realized that its ability to wring greater revenues from its arrangement has spurred the company to make its $44.6 billion play for Yahoo (NSDQ: YHOO) right now; the theory being that Microsoft, which has a multi-year deal to sell ads across Facebook, can expand its ad base more efficiently by owning Yahoo.
Responding to WSJ’s contention about its return on social net ad sales, John Tinter, Microsoft