Panama Puts Yahoo Back in the Race

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With the new model, Yahoo would provide a stronger challenge to Google, reward advertisers whose ads performed well, and begin an effort to narrow the gap with its bigger rival in revenue per search.

Up Through the Ranks

Will the new platform let Yahoo win the search engine race? It's still far too early to tell. Yahoo has warned investors not to look for an impact on the bottom line until the latter part of the year. That said, there's no reason why Yahoo's new technology won't help it win the hearts, and the budgets, of online marketers. Early research by comScore Networks indicates Yahoo ads are getting a boost from Panama. The so-called click-through rate, a measure of an ad's effectiveness that divides the total clicks on search ads by total searches, rose in each of the two weeks after the ranking model was introduced, comScore said Feb. 26.

Indeed, Yahoo's new platform has actually given the company a great advantage in search advertising. To continue our racing analogy, they may still be two laps behind but they're now completing those laps faster than Google can. How? Not only has Yahoo rolled out a ranking algorithm that matches Google's but it leapfrogged the company with the introduction of a new advertising console.

If you're going to go back to the drawing board, Yahoo decided, you may as well tackle all your weaknesses and those of your competitors as well. The new Yahoo interface is beyond anything that Google offers and is both intuitive for first-time users and robust enough for seasoned advertisers.

It employs the user-friendly AJAX Web programming language, for example, to let advertisers readily view how much search inventory is available for a particular search query, how much they need to bid, and what traffic levels will likely result. Yahoo also offers advertisers information on what it calls "assists," or ads that may not have brought in sales immediately, but affected a future buying decision.

Google doesn't offer this. It's one of the ways Yahoo can now demonstrate how effective its ads can be, helping lure new advertisers or a bigger slice of existing clients' budgets.

Yahoo's pit stop will prove to be a sound—if somewhat belated—strategic move, and there's no doubt the company will see revenue improvements before the year is over. With this new focus on paid search, Yahoo should be able to make for an interesting race, and maybe even a photo finish.

Beal is an Internet marketing consultant specializing in search marketing, blogging, and reputation management. He covers these and other Internet-related topics in an occasional column at http://www.businessweek.com/technology/.