Panama’s Indirect Impact: Will We Finally See a Two Horse Race?
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Written By Peter Hershberg | March 1, 2007 | Share This
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On Monday, Comscore released data on the short-term impact of Panama on Yahoo’s performance. From the release, “ComScore data show that the recent introduction of Yahoo!’s new search marketing ranking model is already having a positive impact on the click-through rates for Yahoo’s search advertising.” They report that click-through rates on paid search ads have risen by 9% since Panama’s official launch on February 5th.
Though it’s still WAY too early to assess Panama’s long-term effects, the immediate CTR increase has many industry observers hopeful about Yahoo’s overall financial performance. I’m surprised however, that few have mentioned two additional factors that are critical to the effective monetization of those clicks. They are:
- Geo-Targeting
Both Google and MSN have offered Geo-targeting for years, giving both engines a significant advantage over Yahoo. With Panama, however, Yahoo has arguably surpassed Google and MSN with more sophisticated targeting mechanisms and nifty UI features like interactive maps. It goes without saying that “local” advertisers will find Yahoo a more attractive advertising venue, while national advertisers will have the opportunity to expand campaigns that were previously limited. This should mean an increase in ad dollars spent on Yahoo. - Separate Campaigns and Tracking for Contextual Ads
Yahoo has technically been in the “contextual” advertising business for years, but its distribution and tracking capabilities were limited. As a result, significant traffic volume and contextual-specific performance results were difficult to capture. In November 2005, Google implemented separate search and contextual channel management in response to heavy demand from SEMs (Reprise Media included). Yahoo has finally made the same move with Panama by separating contextual and search tracking, thus giving marketers a way to measure the effectiveness of contextual advertising as a separate entity. Again, this should mean an increase in ad dollars being spent with Yahoo, as advertisers begin realizing the benefits of contextual on its own.
Only with the combined effects of better CTR, more sophisticated geo-targeting, and visible contextual results, will Yahoo have “currency” to begin competing for syndication deals that it has historically lost to Google. With better syndication deals, Yahoo can build a portfolio of high-quality inventory, and may finally address one shortcoming that Panama cannot directly fix - conversion rates. Once Yahoo improves its conversion rates to a level that rivals Google, we may actually see a legitimate two horse race.
Topics: Yahoo! |