New Panama ad platform helps Yahoo stabilize paid search market share

Yahoo Inc.’s market share for paid search advertising—which dropped precipitously in 2006—has stabilized since the introduction of its new Panama advertising platform in early February, according to a new study from SearchIgnite and RBC Capital Markets.

“Yahoo has definitely stabilized its share of the search marketing pie with the release of their new Panama platform, says Roger Barnette, president of SearchIgnite. “The next step is to scale their platform by generating increased consumer search demand.”

Big brand marketers benefited most from the Quality Index introduced by Panama, experiencing a 37% decrease in the cost per click, according to “Yahoo Panama and the Broader Search Landscape: A Q1 2007 Competitive Review.” The Quality Index measures the expected relevance of an ad based on factors such as its historical click-through rate. Before Panama, Yahoo ranked ads based on the highest bid. Since Panama’s launch, it ranks ads based on both the bid price and the Quality Index factor.

However, the study found that while Yahoo’s quality index ranking algorithm has improved its ability to monetize its search listing pages, it still lags behind Google in this area and is losing ground.

Google made changes in its Quality Score algorithm during the first quarter, resulting in a better-than seasonal showing in click-through rates, according to the study. Google’s March 2007 eCPM (effective revenue generated by Google per thousand ad impressions served) declined by only 4.6% from February to March, compared with a 24.7% drop in the identical months last year.

The report—which tracked more than 14 billion impressions and 144 million clicks across more than 500 marketers, was compiled based on research conducted beginning in 2006 and running through March 31.

SearchIgnite is a search and media management technology provider managing more than $200 million annually in paid search. RBC Capital Markets tracks Yahoo. This is the second in a series of quarterly reports that tracks results from Panama.