Yahoo!'s Panama: Little Engine That Couldn't

SAN FRANCISCO -- If Yahoo!'s(YHOO Quote) investment in its Panama advertising platform was meant to turn the company around, all it's done so far is keep it from sinking further.

The tech giant had looked to Panama as a game-changer, allowing it to better compete against its formidable search-advertising opponent, Google(GOOG Quote).

But more than a year after Panama's launch, not much has changed -- Google remains far ahead in the search industry in terms of its money-making abilities with advertising. And while Yahoo! has made gains with Panama, it hasn't been able to accelerate its search market share enough to instill any fear in Google.

So now the real question is: Was it worth it?

The best answer may be another question: Was there any other choice? It's difficult to doubt that when Yahoo!'s growth started to stagnate a few years ago, the company's best ploy was to focus on boosting the revenue capabilities of its search operations -- where Yahoo! was still a significant player, with as much as 30% of the search query share just 18 months ago.

But Yahoo!'s search-monetization efforts have likely come too late: Not only was Panama subject to crucial delays, its effectiveness -- when finally implemented -- came during the period of what can only now be seen as Yahoo!'s involuntary abdication as a major player in search.

Last month, comScore reported that Yahoo!'s market share in U.S. search was 20.4% -- stagnant, at best, from 22.8% in October 2007 and down one-third from late 2006. Google garners more than 60% of U.S. search query share.