Search Marketing - Going to Panama
by Michael HoffmanThursday, December 14th, 2006
Yesterday, Yahoo! announced that their new search marketing system, called Panama, would be available to all US businesses. Yahoo’s search marketing businesses was the first out of the gate and called Overture. Yahoo bought Overture and changed their name to Yahoo Search Marketing. What we loved about Overture was its transparency. If you paid more for a search term, you were higher ranked among the sponsored links. End of story. You could also see what others were paying, and, basically you knew where you stood.
Google, on the other hand, is a black box. You bid for placement, but they take into account your click-through rate and your “relevance” in deciding where you will be placed. And they don’t tell you how they decided any of that because it’s all one big trade secret. For our clients, Yahoo! almost always delivered better ROI. But for Yahoo as a business it wasn’t good. Google ate their lunch and Google’s market value — about $150 billion right now — is due in large part to their ability to monetize search better than their competitors. Google was able to beat out Yahoo! and Microsoft in doing deals to control the advertising space and search with AOL and with MySpace due to the fact that they could pay more, which is due to the fact that they make more. Yahoo has been scrambling to catch up.
To counter this advantage, Yahoo has totally reworked their search system and created what they call Panama. I asked Jon Morris of Internet Marketing Initiative, the guy who knows search better than anyone, what we should think of this. Here’s what he said:
Panama will offer substantially better management controls, but will also probably lower the return on investment for our clients. The new program will probably increase the cost per click.
