Yahoo's new Internet ad sales system is a progress

January 26, 2007

The introduction by Yahoo Inc. of its new Internet ad sales system was successful. The company's new feature may turn out to be very useful for Yahoo's shares, since investors are betting on rapid growth of the company's revenue.

When Yahoo stated that it will launch on February 5 a full version of its new system, entitled Panama, the company's shares rose by 8 percent on Wednesday. The system, being introduced in the United States, will be launched a month earlier than Wall Street expected.

The ad system is to bring the company in closer league with the number one search engine Google Inc. Yahoo's technology will permit various advertisers to pay for specific search terms, which are based on their popularity.

Panama will also help advertisers in targeting ads that are sent to a specific audience on the Internet. The system will allow rotating ads in accordance with their effectiveness. Google have been offering these features for several years.

Martin Pyykkonen, who is the analyst at Global Crown Capital, said that Yahoo was not as successful as Google but it still continues to strengthen its position as number 2. Although Google had a stronger software platform, Yahoo continues to register good results, which is worth something.

Pyykkonen also mentioned that he is not forecasting any shifting in wholesales, and especially a sudden fall of Google, but he is sure that Yahoo will not be far behind Google; in fact the company is to shorten the gap between the two.

The ability of Yahoo's new system, to draw more ad dollars from customers, should boost the company's growth in this year's second half. Yahoo is also dealing with a potential drop in prices regarding its key branded advertising sales. This is due to the competition provided by MySpace.com and YouTube.