The new advertising platform is Yahoo’s effort to close the wide gap with Google in the race for search advertising dollars, a fast-growing business currently dominated by Google.
The first release was code-named Project Panama, which went live in October 2006 for Yahoo!'s existing customers. Customers with accounts already on Yahoo! were transferred over to the new system over the following few months.
Yahoo! inherited the search advertising business when it purchased Overture (previously named Goto.com). Until Panama, Yahoo! search continued to operate the original simplistic algorithm which ranked text ads according to how much advertisers bid for the keyword searched by user. Meanwhile, Google operates under a more sophisticated model, which ranks paid ads on the basis of bid price as well as prior click through rates. This improvement generally produces higher click through rates (hence higher revenues) for the search engine.
For example, an ambulance-chasing attorney bidding for the keywords "back pain" would likely get a lower clickthrough rate than the keyword "physiotherapist", regardless of what the two parties bid per click. An algorithm that eventually de-prioritises attorney's ad is better for the search engine (in terms of revenue produced) and the user (more relevant ads).
The platform provides advertisers with a digital dashboard where they can manage their marketing campaigns, aim ads geographically and test their effectiveness. It includes interactive tools that suggest to advertisers what to bid based on their budget and the number of users they want to attract.
The quality index, as called by Yahoo! engineers, gives advertisers a sense of how the system will rank an ad, and sophisticated analytical tools that give advertisers insights on why certain campaigns are effective.