Study: Yahoo benefits from new search ad system

Yahoo's new search ad ranking system is having early positive results

People are clicking more often on ads served up by Yahoo's search engine since the company switched to a new ad-ranking system earlier this month, according to comScore Networks, a firm that measures Web usage and traffic.

The click-through rate on Yahoo's search ads increased 5 percent in the week ending Feb. 11 and 9 percent in the week ending Feb. 18, both compared with the week ending Feb. 4, comScore said Monday. The new ranking system went live in the U.S. on Feb. 5.

ComScore defines click-through rate as the total number of clicks people make on search-engine ads divided by total search queries.

Yahoo's new system assigns rank to pay-per-click search ads by taking into consideration the advertisers' bid amounts plus the ads' relevance to the search query. Previously, Yahoo ranked ads solely based on the amount bid.

The new ranking system is part of Yahoo's new search advertising platform, called Panama, which also has a campaign management tool for advertisers that was launched previously.

Yahoo has high hopes that Panama will boost its search ad business and allow it to compete better with Google, which has built its empire selling this type of ad. In this model, advertisers choose search query keywords that will trigger the appearance of their ads. The advertisers offer to pay a fee of their choosing whenever a search engine user clicks on their ad, thus the bidding nature of the model.

Yahoo's financial performance in the past year has been lackluster, compared with Google's consistently stellar one, and Yahoo executives have acknowledged that their search ad business has been a weak link.

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