Posted May 21, 2007 4:59 pm by with 1 comment

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By David Vogelpohl

Love it or hate it, US advertisers have long ago come to terms with the new Panama ad system at Yahoo. As announced in a May 9th email from Yahoo France, European advertisers will soon be joining their US cousins in using the new system to make ad buys through Yahoo.

Back in March 2007, Andrew Buckman (EU Product Director for Yahoo Search Marketing) announced that Panama would be available in European markets by the end of May 2007.

According to the May 9th email announcement from Yahoo France, information regarding the launch of Panama in Europe will be sent out “in the coming weeks.” While there was quite a bit of optimism from the European search community regarding an early Panama launch (as early as April 2007), it looks like June will be the earliest that European advertisers will be able to use the new ad platform.

With Yahoo’s troubles with Panama in the US, one can’t help but wonder how European advertisers will respond to the new ad system.

Quality score based ad serving was supposed to be a boon for Yahoo’s struggling search business. Emulating ad serving algorithms from competitors like Google, Yahoo was seeking to improve its highest bidder based ad system with a combination of bid and quality score based ranking.

It was thought that Panama would provide more relevant ads for Yahoo’s readers, more clicked ads, more revenue, and a better experience for the advertiser.

In reality, Yahoo has seen lower revenues driven in part by slipping market share and complaints from advertisers over everything from their Flash based interface to restrictive ad network buys.

Yahoo’s problems with Panama has reached such a height that a class action lawsuit has been filed against Yahoo claiming “Yahoo!’s stock rose precipitously on defendants’ positive statements concerning Yahoo!’s sales growth, record reported revenues and earnings and strong business fundamentals, which defendants stated would provide further stability and growth, reaching a Class Period high of over $43 per share on January 6, 2006. However, concealed from investors was the fact that due to operational deficiencies in its ad technology, Yahoo! was rapidly losing market share to Google and other search engines and Web destinations that would significantly undermine its revenues, earnings and value.”

While this lawsuit may be largely meritless, it does bring attention to the fact that Panama hasn’t lived up to its expectations.

As advertisers prepare their European Yahoo campaigns for the Panama transition, I’m reminded of the saying “If it ain’t broke don’t fix it”. While the Overture ad system is far from “ain’t broke”, it seems Panama hasn’t been the greatest alternative. Hopefully the transition to Panama won’t cause the same advertiser ill-will and reduced revenues that Yahoo has seen in the US. There’s nothing more frustrating than figuring out the cure is worse than the disease.

About David Vogelpohl

David is the Vice President of Marketing and Sales for Giganews, Inc., the world’s largest Usenet access company. For over 6 years David has managed countless large scale global Internet marketing campaigns covering up to 8 different languages. David’s specialties include PPC management, affiliate channel sales, and Search Engine Optimization.