Yahoo throws its new search hat into the ring

Panama search engine debuts in Australia

Yahoo Search Marketing's revamped search engine advertising system, codenamed Panama, has made its Australian debut.

The new service first went live in the US earlier this year.

The update has been a long time coming with Yahoo Search Marketing's Australian MD, Craig Wax, describing Panama as a major engineering project by the company.

The previous advertising model was based on technology written in the late 90s by GoTo.com. GoTo.com then became Overture, which Yahoo subsequently acquired in 2003 for US$1.6 billion.

But this technology had its limitations.

"We wanted to deliver the right ads to the right people and to provide clients [with an] easy to use platform. Panama helps us achieve this," said Wax. "It is geared towards advertisers, but will provide better experience for users."

Wax said Panama consisted of several key components including: geotargeting, fast ad activation, ad testing and results based search or what it terms the 'visible quality index'.

The latter is the biggest change to the way it conducts searches. The new system will rank ad results based on both the fee paid and their relevance to the search. This means the actual quality of the ad -- in terms of the text -- and how that relates to the paid search term is a major contributor in it appearing at the top of the paid search list. Earlier versions of the ad word system ranked advertisements solely on the basis of who bid the most for a search term.

"This will generate more clicks [to advertisers] because we will be showing more relevant ads," Wax said.

Although Yahoo is currently switching ANZ customers over to Panama, and hopes to have them using the new system by August, the new ranking model won't kick in till the end of the year, Wax said.

Yahoo has also enhanced its geotargeting feature, which lets customers restrict ad displays to Internet users in a limited area. This is useful for small businesses that serve local markets. Where in the past search terms were displayed in all of Australia and New Zealand, Yahoo has now divided Australia into 35 regions and New Zealand into 16. There are also further subsets to those zones. The end result is better value for advertisers, Wax said.

Panama is also fast. Yahoo says new ads or modifications to existing ads are now approved within minutes, not days. This is important for customers that run time sensitive listings.

Its new ad testing feature allows it to work with customers to see what creative and ad word works best. It will also run variants of search words and whatever attracts the most clicks will remain on the site while the less effective search terms would be jettisoned.

The new sponsored search product is important for Yahoo as it vigorously competes with Google's AdWords.

Already, the new system is working a treat, at least for one customer.

Justine Watkins, head of search at Columbus, a firm which provides pay per click (PPC) management services, said she had seen an increase in traffic by up to 15 percent with the switch over to the new system.

She did not identify any of her customers but said she had already seen increases in hits and a reduction in the cost per acquisition.

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