Yahoo! opens Panama ad canal


Yahoo! Inc.'s much-discussed new search-marketing platform Panama is now open to new company advertisers, the Internet portal said Tuesday.

Panama, whose delays and importance Wall Street has discussed much amid the Internet bellwether's recent advertising challenges, has been open to existing Yahoo! search ad customers since October.

"We've received an overwhelmingly positive response to our new search-marketing platform to date," said Steve Mitgang, senior vp Yahoo! advertising products and platforms. "We are thrilled to open it up to all businesses that want to take advantage of our more intuitive and powerful system."

Yahoo!'s goal with Panama is to make a more streamlined and user-friendly system for advertisers to manage their accounts on the Web site. Among other things, the program has features for advertisers to test campaigns, organize budgets and track progress.

The company, led by chairman and CEO Terry Semel, is transitioning hundreds of thousands of search-advertising customers in the U.S. to the new platform on a regional basis. This will continue into the first quarter, the company said Tuesday.

Following the changeover in the U.S., Yahoo! will begin to roll out the program in other countries.

Beleaguered by criticism that it has let its competitors -- particularly Google Inc. -- beat the firm in core areas as of late, Yahoo! last week unveiled an organizational restructuring to shift its focus from a product- to a customer-oriented approach. Senior management on Project Panama remained unchanged.

Despite a falling Nasdaq on Tuesday, Yahoo! shares closed up 1% at $26.75. The stock has traded between $22.65-$43.66 during the past 52 weeks.

One primary feature of Panama has Yahoo! ranking advertisers based on their "quality score" as well as their maximum keyword bid. Quality is based on factors like click-through rates.

Goldman Sachs analyst Anthony Noto said this could cause ad spending to stagnate in the short term as advertisers rethink how they will spend with Yahoo!

Some that experience a decline in leads generated because of Panama might increase their bid prices, though others could shift money to competitors like Google, Noto said.

On the other hand, advertisers that experience an increase in leads generated because of Panama could, instead of beefing up their ad spending as Yahoo! hopes, reduce it, "as less is required to achieve prior revenue goals," Noto said.

In a research note Tuesday, Noto reiterated his "buy" rating on Yahoo! shares and $30 price target.

Alex Woodson reported from New York. Paul Bond reported from Los Angeles.