Yahoo!'s Platform Push

Project Panama is aimed at closing the Google gap.
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Yahoo!

(YHOO)

has thrown open an initial floodgate for its highly anticipated Project Panama platform.

Panama's upgraded user interface now allows advertisers to publish their online ads almost instantly, tailor ads by geography and run multiple ad campaigns -- features already offered by

Google

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, says Josh Stylman, a managing partner at search-marketing firm Reprise Media.

These additions will make Yahoo!'s platform more attractive to advertisers who tend to divide their budgets between the two major search engines -- and have tended lately to lean more and more toward Google.

The new interface, previously limited to existing Yahoo! customers since its debut in October, is now open to all U.S. users.

New search functions for Yahoo!'s ad platform, including an upgraded way to display advertisements, are due out in the first half of 2007. In the new display method, ads will be ranked by the likelihood of getting clicked on along with the amount bid by the advertiser. The new system is based on the method used by Google and is intended to help Yahoo! close the gap on the amount it makes per search with the search giant.

While Yahoo!'s current crude system of ranking ads is tantamount to leaving money on the table, its limiting and outdated user interface also had put the company at a serious disadvantage when competing with Google for a share of advertisers' online budgets. But the revamped front-end will put the company on much more even footing when it comes to wooing advertisers -- a move that search experts say will help drive more revenue to the company.

"What Yahoo! had was an antiquated system," says Stylman. "This new system catches them up with Google."

The new Yahoo! interface is also easier to use and much more intuitive, says Ani Kortikar, CEO of search marketing firm Netramind. The old platform, a holdover from Yahoo!'s acquisition of search firm Overture in 2003, was many steps behind Google's simple yet powerful interface.

Tying the new, easy-to-use interface into its other holdings, especially Yahoo! Store -- an e-commerce site that allows small businesses to setup online shops -- presents a big opportunity for the company, says Kortikar. The simpler design combined with potential incentives like free credits from Yahoo! could lure new merchants from online stores to give the service a shot.

Yahoo!'s huge user base can serve as an advantage at a time that both Google and Yahoo! are trying to bring more small businesses and first-time users into their fold.

A Yahoo! spokesperson also confirmed that the company continues to remain on track with the timetable it has outlined for launching Panama. This latest step forward comes after the company received positive feedback from the select customers who started testing the system and as it continues to transition many existing accounts to the new system.

A timely launch of Panama is critical for Yahoo!, which has already delayed the rollout once this year. In July, the stock tumbled when Yahoo! announced it was pushing back the introduction of Panama. Shares of Yahoo! were recently up 27 cents, or 1%, to $26.86.

While the new upgrade will bring Yahoo! more up to speed with Google, it's ironic that Yahoo! is playing catch-up, given that it was once the pioneer in search, notes Stylman. And despite Yahoo!'s media prowess, it is Google that is now steaming ahead into new markets and recently announced a deal to auction ads for newspapers.

"We all thought it would be Yahoo! that would be the first to take advantage of these new markets," says Stylman. "They had the opportunity, but let it slip through their fingers."