Late last week, the rumor around the blogosphere was that some advertisers may be getting access to Yahoo's new ad platform within a few weeks, earlier than the most recently-announced delay until the fourth quarter (or even early next year).
Seeing the rumor, I thought this would be a good time to revisit what this Project Panama is all about and why it's so important. I'll quote what Terry Semel, Yahoo's CEO, recently said in an interview: "We sell ads. Having a dedicated audience that spends a lot of time doing whatever they do leads to very good advertising prospects." And this is where Panama comes in. Panama is about the advertising system Yahoo has in place.
Yahoo Project Panama will make Yahoo more comparable to Google's AdWord system. The ranking, or the order in which ads are displayed, will be determined by a few factors such as the amount advertisers pay for keywords, the ad relevance, clickthrough rates and other undisclosed "quality factors."
This is different from the current system where ads are placed solely according to pay-per-keyword. Project Panama new model also aims at better local/regional targeting, has conversion tracking tools and even ad display options, among other features.
A user wouldn't notice the difference when Yahoo's new search-advertising system is in place, except for the fact that the ads the user would see would be more relevant to the search text entered. This should translate into more clicks and ultimately far greater ad revenue for Yahoo - a 20% increase right away, or $600 million next year according to this New York Times article.
Officially, Yahoo has delayed Panama to the fourth quarter, disappointing investors. However, if the above-mentioned rumors are true then maybe, just maybe, there's a chance for an earlier release. At the very least, investors may have more confidence in the fourth quarter promised release date.