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Yahoo! Sponsored Search (codenamed Panama), an online ad system meant to compete with Google, had hopeful reviews early on and is getting praise from analysts and marketers. Denise Garcia, an analyst for A. G. Edwards, for instance, said there is obviously considerable comment from channel checks with search engine marketing agencies and advertisers, but there are many questions still to be answered. Some analysts regard Panama as the most important project ever for Yahoo!. Yahoo! began work on Panama when its search ad technology had been losing favor and when advertisers had begun spending more money with competitors that provided more effective search engine ad methods. Search advertising sales should reach $8.3 billion in 2007, which is a 19 percent rise over 2006, says eMarketer. Yahoo! and its rivals auction search ad space, and winning ads are seen in the margins of webpages. Yahoo! had been giving the highest ranking to ads based only on what they paid, and Yahoo! had overlooked the important of the ads relevancy to users. Panama takes into account the success of an ad in generating clicks, as well as the fees paid by advertisers. Terry Semel, CEO of Yahoo!, wants to bolster Yahoo!'s slowing growth, and search accounts were an estimated 56 percent of Yahoo!'s revenue, according to one analyst estimate.
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