The opening of the Panama Canal in 1914 instantly slashed the number of miles ships had to travel to get from the West Coast to the East Coast by more than 50% and was a major boom to commerce.

Fast-forward to 2007. A similarly named undertaking is about to launch: Yahoo! Search’s revised search-engine ad model, Project Panama.

On a very top level, the goals of the canal and the cyberspace project are eerily similar: to help companies conduct more commerce more efficiently. And just as some 80,000 people helped build the canal, at Sunnyvale, CA-based Yahoo!, it appears that Project Panama has been an all-hands-on-deck effort.

John Kim, senior director, product marketing for Yahoo! Search, said in a recent interview that “increasing the advertisers’ ROAS [return on advertising spend] and other key ROI metrics is the mantra for Project Panama. By increasing volume and yield with a vastly simplified user interface, we believe campaigns will be much easier to manage and will yield improved and more-consistent results.”

A key difference between the redesigned model and the previous version is that Yahoo! will be rewarding advertisers who spend the time to optimize their Yahoo! paid-search campaigns. By embracing the new system, the best and most-relevant advertisers over time can expect to see lower pay-per-click (PPC) prices and higher rankings. Specific enhancements include

  • the ability to run A/B-split testing of copy.

  • a heavy-duty forecasting and projecting module.

  • analysis of not only the last keyword that led to a sale but also the ones previously searched for. For instance, a customer who buys a red cashmere sweater immediately after searching for “red cashmere sweater” may have searched on “sweaters,” “cashmere,” and “cashmere sweaters” before typing in that final term.

  • a new interface to help with workflow and campaign planning and execution.

  • a “clicks left on the table” feature that alerts you to how much more volume you could expect from a particular keyword if you were to increase your spending.

We recently interviewed Kim about what marketers can expect from Panama. The following are key responses that direct marketers need to be thinking about:

Q. As Yahoo! moves to an invisible bidding environment, what factors will be taken into consideration when ranking the ad listings?

A. Yahoo! has an algorithm that will take several factors into account, such as bid amount, click-through rate, and other proprietary factors.

Q. When this transition is made, will past click history of an advertiser carry over into the new platform, or does everyone essentially begin with a blank slate?

A. Some history will be taken into account; however, we are still determining the exact time frame of history. The most recent history will carry the most weight.

Q. What is Yahoo! Search Marketing’s goal?

A. The goal is to enhance the end-user experience by displaying the most-relevant results to their search request. In turn, paid-search advertisers who focus on optimizing their campaigns will be rewarded.

Q. How will the new advertiser user interface differ from what we see today?

A. The user interface will look very different from what advertisers see today. The changes are to make it easier for advertisers to test, forecast, budget, and schedule. The “missed clicks” feature will aid advertisers in maximizing volume from paid search by allowing them to see exactly what is being left on the table. The forecasting tool will help advertisers maximize their spend.

Q. How will the new optimizer feature work?

A. The optimizer feature will give advertisers inside information to the searcher’s conversion path. If the search began with “digital camera,” but the conversion occurs on “Sony Cybershot,” the optimizer will show the advertiser that the general term played a role in the conversion process.

Q. Will advertisers need to enable Yahoo! Search Marketing conversion tracking function for the optimizer feature to fully function?

A. Initially, yes, but Yahoo! is in the process of working with the “big four” in Web analytics [Omniture, Coremetrics, WebTrends, and WebSideStory] to expand this capability.

So it looks like the steps being taken to improve Yahoo! Search will help direct marketers improve search performance. The changes will allow for those online merchants who focus on better marketing practices to win out, in contrast to the old model of bid insanity.

The only disappointment we’re seeing right now is Yahoo’s continued nonfocus on the poor-quality traffic coming from its network distribution partners. While an improved user experience is a great thing, proper policing and enforcement of the publisher terms-and-conditions agreement still doesn’t appear on the radar, and it’s a must. Until this happens, the jury is out on whether Project Panama will deliver the benefits that it is promising.

As direct marketers we know all too well the impact of demographic targeting and segmentation, and if we are being delivered irrelevant search traffic, we will not improve performance — no matter the improvements made by Project Panama.

The answers shall come in February. Hopefully we won’t be nursing a broken heart come Valentine’s Day.

Tim Daly is senior vice president of marketing and strategy and Janel Landis is search engine marketing manager at SendTec, a St. Petersburg, FL-based direct marketing services provider.

Partner Content

Hincapie Sportswear Finds Omnichannel Success in the Cloud - Netsuite
For more and more companies, a cloud-based unified data solution is the way to make this happen. Custom cycling apparel maker Hincapie Sportswear has leveraged this capability to gain greater visibility into revenue streams, turning opportunities into sales more quickly while gaining overall operating efficiency. Download this ecommerce special report from Multichannel Merchant to more.
The Gift of Wow: Preparing your store for the holiday season - Netsuite
Being prepared for the holiday rush used to mean stocking shelves and making sure your associates were ready for the long hours. But the digital revolution has changed everything, most importantly, customer expectations. Retailers with a physical store presence should be asking themselves—what am I doing to wow the customer?
3 Critical Components to Achieving the Perfect Order - NetSuite
Explore the 3 critical components to delivering the perfect order.
Streamlining Unified Commerce Complexity - NetSuite
Explore how consolidating multiple systems through a cloud-based commerce platform provides a seamless experience for both you, and your customer.