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Yahoo!'s Panama is a search engine redesign initiative that will emerge online on February 5, 2007 and is expected to in a way make or break Yahoo!. Yahoo! has been plodding along in back of Google in leveraging paid search with ads that appear next to search results. Yahoo! has experienced slowing profit growth, which has spooked investors, making Yahoo! shares drop by half in just over a year. Terry Semel, CEO of Yahoo!, set in motion a substantial reorganization two months ago after which two top executives resigned. Success or failure with Panama could influence Yahoo!'s revenues and finances for years. Sasa Zorovic, analyst for Oppenheimer & Company, has said, Potentially, Google is finally going to get some meaningful competition. Search engine advertising, which is a leading business, is expected to generate $8.3 billion in sales in 2007, says eMarketer, and advertisers increasingly use it to promote products to a group that is regarded as a buying demographic. While television commercials have a wide target market, search ads are customized to the interests of the individual, and advertisers can choose the search queries that their message will appear next to. Yahoo! ads have often been off the mark, says executives for Yahoo!, and the new Panama formula will correct the problem by considering the past success of an ad in generating clicks and also the amount that advertisers are willing to pay.
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