This Monday is a big day for Yahoo, in its by-now-almost-mythical quest for relevance in more ways than one: its new search ad technology Panama’s ad-ranking algorithm begins its work starting around 3 p.m. Pacific time. The first phase of the project, which went into operation in mid-October, two months later than planned, included a completely new system for advertisers....
In its simplest terms, as NYT explains, Panama is Yahoo’s attempt to place ads in front of users that are more likely to be clicked on. Until now, Yahoo gave top billing to the advertisers who were willing to bid the most to have their ads listed alongside a particular search result. By doing this, it is only now catching up with Google and even MSN.
This is a huge undertaking, and Yahoo engineers say Panama has some unique features, like a “quality index” that gives advertisers a sense of how the system will rank an ad, and sophisticated analytical tools that give advertisers insights on why certain campaigns are effective.
It is intended to be flexible enough eventually to handle video and audio ads and to distribute ads to mobile devices. And while Yahoo gives few specifics, it says Panama will some day play a role beyond search advertising.
But it is still a catch-up game for Yahoo. On Wednesday Q4 earnings conference call Google CEO Eric Schmidt said the company was placing fewer ads in front of users, yet receiving more clicks. That means not only that the ads are more relevant, but also that the experience of users is better.