Off to a great start

Posted January 25th, 2007 at 2:54 pm by Terry Semel, Chairman and CEO

 15 Comments / Filed in: Trends & News

Panama: A country, a canal, or the next generation of Yahoo!’s search marketing?

Now that I’ve had a chance to catch my breath after announcing our quarterly earnings this week, I thought I’d reflect on something that I think is probably the most important news you’ve heard from us in a long time. As I said last quarter, we’re laser-focused on improving how well we monetize our search business. It’s important not only for our shareholders, but also for the vast number of advertisers that want to tap into this incredibly cost-effective and wildly popular marketing medium. By the way, the better we are at helping these marketers, the better Yahoo! Search becomes for the millions of consumers who rely on it. Let me explain why.

I’m extremely pleased that an important piece of our new search monetization system (a.k.a. “Project Panama”) will soon make its debut. In about two weeks, advertisers in the U.S. will experience a whole new way of ranking text ads on Yahoo! — and consumers should find that text ads are more relevant to what they’re searching for. Search ads will no longer appear alongside search results based solely on the bid price for a particular keyword. We’ve developed algorithms that also factor in the ad’s “quality,” which is based on historical performance (how often consumers click on it) and its relevance to what the user is searching for. Higher quality ads will generally receive better placement, and may even cost less in some cases. And the system will grow smarter over time.

What does all this mean? Advertisers will have more control over and visibility into their campaign performance, giving them greater confidence in (and potentially greater return on) their investment. It also means that the millions of consumers who come to Yahoo! to search for information on the Super Bowl, Lindsay Lohan or tax deductions will find text ads that are even more relevant to their searches. It’s a self-reinforcing cycle, a win-win for advertisers, publishers and consumers. And we hope for our shareholders, too.

We’re ahead of our own schedule for turning on this critical new feature (a Herculean effort by all involved) and are receiving tremendously positive feedback from customers on the system itself. We’re feeling fantastic about having this milestone under our belts.

Stepping back, I think we’re off to a great start in 2007. We’re hitting an important milestone in becoming more competitive in search. We’ve also made progress in sharpening our focus to address our challenges and opportunities. The pieces of our company realignment are moving into place. We ended 2006 outperforming the market as the largest display ad network in the world and intend to do so again in 2007. And we’re supporting our mission to connect people to their passions, their communities and the world’s knowledge with continued investment in our social media, video and mobile services.

We have plenty of hard work ahead of us, but I feel good about where we stand today and about the opportunities around the corner and down the road. Til next time…

Terry Semel
Chairman & CEO

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15 Comments Add your own

what ever | January 25th, 2007 at 9:26 pm

Y! shd

i) Grab as much as market from google.

ii)change it’s monetization strategy

iii)so many applications coming out of yahoo like 360.yahoo.com,yahoo messenger are not elegant to use;they include lots of features(avatars i mean) which increases the complexity and speed,keep in the mind the user who has very low bandwidth.

iv) success comes through simplicity..make the applications from the user point of view.

v) say bye-bye to flash ads,they don’t work anymore

vi) as of now,what yahoo does is,make an product or a service and then apply monetization right from the first day.This is wrong,360.yahoo.com proved this(btw it is very slim in features)

vii)I still don’t understand what yahoo is doing with the amazing userbase it has with yahoo messenger(250 million plus)..why not make a community website like myspace or facebook using the never ending userbase of yahoo?In this area yahoo doesn’t learn from mistakes($1.6bn for facebook??)

vii)ways to topple google
get a clean search url
build a brand around the url by offering services which are
geek and nerd friendly and the rest of www people follows
with them
wherz the blog search??
A new way for local search(This is the future)

vii)yahoo forgot the value of community

viii) so many products hasn’t evolved in a long time(geocities for eg..)

ix)customer care should improve

x)make the yahoo mail in Ajax(new beta mail sux)

xi)Innovate faster in the area of publisher network

Good Luck with the Panama

I love Y!

jojo | January 26th, 2007 at 1:14 am

what ever, your point #7 is great. what Y! need to do now is manipulate the users. not just buying startups.

Y! has lots of web apps + Services, but still lacks in integration.

Hopefully, panama will be Y! greatest turning point. beat that google guys!

robert | January 26th, 2007 at 2:11 am

very nice! I’ve been waiting a long time for this feature. I would love to have a link where I can direct my readers at my blog, hipfox.com, to sign up for beta testing

Ivan Pope | January 26th, 2007 at 2:54 am

Doesn’t that start ‘A man? A plan? A canal? Panama - it’s Yahoo’s … ‘ - you missed a chance to use the best palindrome!

Justin | January 26th, 2007 at 8:20 am

Glad to hear the message clearly from the top. Thanks.

Mike | January 26th, 2007 at 9:30 am

Panama: a great song from Van Halen!

(Sorry, couldn’t resist)

Nicki Dugan | January 26th, 2007 at 11:03 am

Robert: Actually our new system is well beyond beta. It went live last quarter and new customers can sign up at http://signup.marketingsolutions.yahoo.com.
The new ranking model Terry posted about will be available to those customers as of February 5th (and in the coming months for those outside the U.S.).

Steve Morsa | February 6th, 2007 at 7:03 pm

Terry,

Well-earned congratulations are in order for the entire Yahoo team for bringing Panama to market. It’s sure to produce a number of great benefits to and for Yahoo and its fine employees in the months and years to come…

…and now, assuming you’d like to continue the competitive attack on media-darling Google, you’ll probably like to take a careful look at a completely new form of patent-pending (#11/250,908) advertising called Match Engine Marketing, or simply, paid match.

It would be a masterful way to leverage your huge identified customer/user base…while providing your advertisers with the ability to–believe it or not–select and bid on the actual demographic and psychographic traits and characteristics (keytraits) of their most desired customers and clients.

With Panama, you’ve provided advertisers with the tool/s necessary to maximize their results when it comes to bidding on keywords…

…why not now also offer them the ability to bid on keytraits as well?

As the first one was, should the next GoTo/Overture be in anyone’s hands than Yahoo’s?

Denis | February 13th, 2007 at 7:57 am

What are the plans of Yahoo in the Netherlands? I think there is a big market share to gain (for all European countries), also without too much of a competition. My hands are almost itchy of wanting to participate in this for the Netherlands? Is there a way of buying a franchise Yahoo for this country?

Best Regards,

Denis Minning
Interim/freelance manager

LTD | February 18th, 2007 at 2:04 am

I am really irritated with your search marketing team. It seems that no matter what keywords I choose, somebody won’t approve them. And, it’s a pain in the butt to get an ad approved. I realize that I am just a minor player in the big league and have to to bid against the big boys. I never have a problem with my ads on Google and I think I will drop Yahoo. Also, when you going to do something about the hundreds of spam messages I receive every day from GeoCities sites? Do I have to sue you to stop all this spam?

Where can I get | April 17th, 2007 at 1:38 pm

some of those YAHOO! flip-flops?

josh | April 26th, 2007 at 3:30 pm

Yahoo is heading in the right direction with wireless ads but they are still way off. The public won’t go for it, it’s just not good enough. Sounds really exciting but its mostly hype. I know how to put it all together so that it gets accepted. My problem is I can’t find anyone to bring it to.

sofia su | April 29th, 2007 at 5:36 am

why did u pick the name Panama? is someone on your team from there? I am… was just wondering.

Nicki Dugan | April 30th, 2007 at 12:11 am

sofia su - here’s the official rationale for the name “Panama”… The construction of the Panama Canal was a major breakthrough in the way the world conducts global commerce. In the same way that the Panama Canal made it faster and easier for countries to sell goods and services to one another, Yahoo!’s new ad platform provides businesses a faster and easier way to sell their products and services to their target audiences.

chris | April 30th, 2007 at 8:08 am

Hire this guy!

Comment by what ever - Jan 25th, 2007 at 9:26 pm