IndustryYahoo Unveils Public Details Of “Panama” Ad System Upgrade

Yahoo Unveils Public Details Of "Panama" Ad System Upgrade

Yahoo's finally gone public with details about its new Panama ad system upgrade, which when launched later this year will bring the system up to matching what Google's long offered, though both Yahoo and Google will remain behind Microsoft's third-generation ad platform adCenter, launched last week.

Yahoo’s finally gone public with details about its new “Panama” ad system upgrade, which when launched later this year will bring the system up to matching what Google’s long offered, though both Yahoo and Google will remain behind Microsoft’s third-generation ad platform “adCenter,” launched last week. Details have leaked before, but now Yahoo’s doing the talking directly.

Let’s step back in time to understand where both Yahoo and Google have come from to understand where Panama is taking Yahoo forward to.

Yahoo, of course, kicked off the pay-for-placement search ads that we take for granted today. Indeed, many mistakenly assume that Google deserves that credit. It doesn’t. GoTo (later Overture, then later Yahoo Search Marketing) kicked things off way back in 1998, before Google even had ads.

The GoTo system was simple. Pick a keyword. Pick how much you’d pay per click for that word, starting at one US penny. Whoever paid the most got top billing.

Google, in contrast, was much more confusing. When AdWords was originally launched (and SEW members, see also here), ads were originally sold on cost-per-impression basis. Ads also were not ranked by how much you pay by also by your clickthrough rate.

On the upside, AdWords operated on a campaign basis, versus a keyword basis. Campaign basis? You ran an ad campaign, which meant one or more ads that were linked to one or more keywords. In contrast, in GoTo’s keyword basis, everything remained having an individual ad targeted to an individual keyword. Want to have that ad match against multiple keywords? Sorry — and forget doing things like broad matching. Instead, you have to buy each keyword individually.

By and large, Yahoo’s system has changed little since it launched. It did add tools to make it easier to automatically target variations of a core keyword, plus it added auto bidding features. But today’s announcement marks the coming of the end of the keyword-based system. Yahoo is adopting the same campaign-based approach that its competitors use.

You won’t find the new system or features in place today. Instead, all that’s happened today is that Yahoo is giving the many ad management companies and others who programmatically access the Yahoo system through APIs more information on how things will work, so they can start building support.

The system itself won’t start changing until the third quarter of this year, sometime between July and September, Yahoo says. The switch will mean that you’ll be able to build campaigns of multiple ads linked to multiple keywords. But the ranking system won’t change. Those campaigns paying the most money per click will still come up tops first.

There’s no timeline on when rankings themselves will shift to being more Google-like, where ads will show ranked based on a combination of clickthrough rate, the amount being bid and other factors. In fact, similar to Google, Yahoo’s not saying what all the “quality” factors will be or how scores are ultimately determined. However, it does promise that the new system will make it easier to see the “ad quality” score for all your ads and campaigns.

But what about jumping up to the third generation of ad delivery, that of demographic targeting or dayparting in the way that Microsoft does? Not even Google is there yet.

Yahoo had two spins on this one. First, there was the suggestion that advertisers might not find those type of features that important

“We’ll launch new features and functionality when we think they will make a material difference,” said Steve Mitgang, senior vice president of advertising platforms and products at Yahoo.

Perhaps, but give advertisers the choice to find out themselves what they consider to be a material difference, I say.

Second, the bigger reason for not rolling these out yet seems to be, after some prompting, that Yahoo’s trying to take its advertisers along the generational jumps slowly. It will be a big transition for many to abandon the old model and into the second generation campaign-based approach before hitting them with other features. So easing them in is part of the delay?

“Absolutely, there’s no doubt we want to make sure that when they shift over that we don’t overwhelm them,” Mitgang said.

What else is on tap? Better local targeting, for one. Pick a region of the US, and you’ll be able to deliver ads to those either searching from that region or using common terms related to that region.

In other words, you can show ads to those seeking limo services in Southern California if they are determined to be from that area based on their IP address, or registration data (someone signed into the Yahoo system) or they use terms like “los angeles limos.”

The system isn’t perfect, as is the case with everyone offering local targeting. That person using AOL will still seem like they are in Virginia, if they aren’t logged into a Yahoo network system, since AOL will report a Virginia address.

Wildcard targeting, which exists now, will be made easier to use. New conversion tracking tools are to be offered, assuming you want to provide data to Yahoo. Conversion data can also be used to have bids run on a Cost Per Acquisition, Return On Ad Spend or CPC-basis. If you go CPA or ROAS, you’ll still be bidding ultimately in CPC — by the system will help do some behind-the-scenes translation for you.

Keep in mind that while I led off saying that Yahoo and Google are “behind” in features compared to Microsoft, that’s not the case with the most important feature — traffic. Ratings services such as comScore and NetRatings still show Google and Yahoo with much more audience than Microsoft. That’s the primarily reason advertisers choose these services — lots of good quality traffic.

Ultimately, as long as there is more demand than search inventory to go around (as is largely the case today), anyone with a major unique ad network is going to be successful. It only becomes a more zero sum game when there is more inventory than demand. That’s when advertisers might become more selective and individual features may matter more.

Some additional coverage:

And the mailing to Yahoo’s advertisers today:

The New Sponsored Search is Coming
Better Ways to Connect with Customers Will Make Your Advertising More Effective

You’ve told us your needs and we’ve listened. A completely redesigned search marketing platform is on its way, full of advanced, easy-to-use features that will help you better connect with Yahoo’s vast and valuable audience.

As part of creating these enhancements, we met with advertisers of all sizes to hear first-hand the things they liked and didn’t like about Sponsored Search. We extensively reviewed all parts of our service, including the design, features and tools. The result of these efforts is the new Sponsored Search, which will make its debut this Fall.

Powerful New Features
The new features that will make advertising with Yahoo better and more effective include:

  • Easy-to-Use Control Panel
    A completely redesigned, easy-to-navigate control panel will help you see what’s working and what’s not–at the level of detail you choose–so you can take action and get even better results.
  • Fast Ad Activation
    Most new ads will go online within minutes, allowing you to connect with customers quickly, and easily make changes to your ads whenever you need to.
  • Ad Testing
    Easily test multiple versions of an ad to find the message that works best for your customers and provides the greatest return on your advertising investment. You can then choose to shift impressions to the ad that performs best.
  • Geo-Targeting
    Display your ads broadly or narrow your geographic distribution to better target your customers, customize your ads and control your costs.
  • Campaign Budgeting, Forecasting and Scheduling
    Create, budget and schedule individual advertising campaigns for greater control over your advertising strategy and spending. Review forecasts of your potential clicks based on your bids and budget and see how many clicks you’re leaving to your competitors.
  • Visibility
    Understand how well your ads are performing relative to your competitors with the new Quality Index displayed for each ad. You’ll also see the bid range necessary for premium placement at the top of the search results page.
  • Easy-to-Use Control Panel
    A completely redesigned, easy-to-navigate control panel will help you see what’s working and what’s not–at the level of detail you choose–so you can take action and get even better results.

Thoroughly Tested and Reviewed by Your Peers
These new features have been rigorously tested by your fellow advertisers and refined over time to ensure that we delivered a service that successfully addresses the obstacles you currently face. Judging by the overwhelmingly positive feedback we’ve received, we are confident that the new Sponsored Search not only clears away those obstacles, but offers new and better ways to manage your account.

Frequent and Detailed Communication with You
Beginning next month, we’ll begin to provide you with much more detailed information about all of the upcoming enhancements. To make your transition as smooth and easy as possible, we will provide:

  • A series of emails with tips on how best to prepare your account
  • In-depth articles on our new features in the advertiser newsletter
  • A new Yahoo Search Marketing blog–a community forum for tips, news and your comments, as well as the inside scoop from our own staff, to help you be more successful
  • A dedicated toll-free phone number that will be available to you during your transition period, for any questions or concerns you may have

This is just the first step. After all advertisers have successfully transitioned to the new Sponsored Search, we plan to quickly introduce many more innovative products, features and tools that will give you even more ways to connect with customers.

As always, thank you for doing business with us. We look forward to delivering the new Sponsored Search to you later this year.

And the Yahoo press release on the announcement:

Yahoo to Launch New, More Powerful Search Advertising Platform


Company outlines plans to introduce easy-to-use customer interface, new forecasting features, enhanced testing and targeting capabilities, and quality-based ranking model

Burbank, Calif. May 8, 2006 Yahoo Inc. (Nasdaq: YHOO), a leading global Internet company, today announced that it will begin rolling out a completely redesigned search advertising platform in the third quarter of this year to help businesses more easily connect to Yahoos vast audience. In conjunction with the announcement, Yahoo released the new search ad application program interfaces (APIs) designed to support the new platform. Replacing the original system that created the search advertising industry, Yahoo new platform will enable marketers to more quickly launch search advertising campaigns across Yahoo and its distribution network, and help achieve better overall return on their search advertising investment.


The new platform will be deployed on a country-by-country basis, with multiple phases within each market to help ensure a smooth transition for the hundreds of thousands of businesses that advertise with Yahoo and to allow search engine marketers ample time to build upon Yahoos new APIs. The first phase, building the core data platform and technologies, is near completion. The second phase will begin in the third quarter, when Yahoo makes its new campaign management application and initial features accessible to advertisers. After the majority of advertisers have become familiar with the new features in a given market, Yahoo will begin the third phase in that market, implementing a quality-based ranking model.


Weve designed our new platform to allow advertisers to reach Yahoos audience through search as well as take advantage of advertising opportunities across all of our unique marketplaces, communications and social media assets, said Steve Mitgang, Yahoos senior vice president of advertising platforms and products. Yahoos new technologies and features should encourage more participation in search advertising by making it easier for marketers to understand the performance of their campaigns and experiment more frequently with the medium.


The new campaign management application was developed based on input from thousands of advertisers worldwide. The initial version will focus on overall ease-of-use in launching and managing campaigns, and providing greater visibility into campaign performance, coupled with more control over how to improve performance The new features and capabilities that will be available in the first version of the application include:


  • Intuitive Control Panel provides a simplified interface with user-tested navigation, allowing advertisers to easily understand their performance and providing them opportunities to modify or enhance campaigns every step of the way
  • Enhanced Geographic Targeting leverages Yahoos WhereonEarth technology, which draws from 15 years of geo-targeting expertise to enable Yahoo to more accurately understand and match to user search intent (Soho, NY versus Soho, London) and colloquial terms (restaurant near Fenway Park is in central Boston, MA)
  • Fast Ad Activation provides a streamlined content review process that allows advertisers to launch most new ad campaigns in less than 30 minutes
  • Ad Testing supports automatic rotation of multiple versions of ads to determine the most effective, and, over time, displays the highest-performing ads more frequently
  • Visible Quality Index scores ads based on quality, bid and other relevance variables, and will be made visible to advertisers to enable them to gauge and optimize placement when the quality-based ranking model is implemented
  • Share of Clicks Forecasting displays data regarding the bid needed to achieve an estimated specific share of expected clicks, helping advertisers to set and reach traffic and conversion volume goals
  • Goal-Based Optimization enables advertisers to let Yahoo automatically help find the least expensive way to meet their business goals-defined as Cost Per Acquisition or Return on Ad Spend
  • Assists shows advertisers the full value and contribution of every campaign by allowing them to see how ads drive both immediate and deferred conversions across multiple campaigns — not just the last click that led to a conversion


While the enhancements to our platform are dramatic and will provide immediate benefits to our advertisers, we ultimately rebuilt our system with the future in mind, said Mitgang. Once the first version of the core platform is in place, we will be able to move quickly to build in capabilities that ultimately will provide search advertisers deeper access to Yahoos more than 420 million users, broader advertising capabilities, proven targeting expertise and global distribution network.


Future versions of the new platform will include additional distribution options and audience targeting based on factors that could include demographic information or online behavior, as well as additional ad formats enhanced with graphics or rich media.


For more information about Yahoos current search marketing offerings, please visit:

Want to comment or discuss? Visit our Search Engine Watch Forums thread, Yahoo Announces New Search Advertising Platform Is Coming. See also Details On New Yahoo Paid Listings System for what’s leaked before and New Look Coming For Yahoo Sponsored Search Listings and 10 Reasons Yahoo Should Kill Direct Traffic Center on issues some advertisers have with the existing system.


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