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BizReport : Research archives : February 23, 2007

Forecast: Panama to boost Yahoo revenue 45%

Financial services and research firm UBS is predicting exciting growth in 2007 for Yahoo, thanks in part to their new search offering Panama.

by Kristina Knight

Panama is actually a search algorithm that will rank paid search keyword ads by bid and keyword quality. Yahoo hopes this will boost return-on-investment (ROI) for search advertisers. The search platform launched in beta to select advertisers late in 2006. After several delays the offering went live to all advertisers in early February, 2007.

According to the UBS forecast, with Panama now up and running and search advertisers rushing to check the offering, Yahoo could see a boost in SEM advertising between 15% and 45% for the year. UBS expects Yahoo's click through rate to increase a full percentage point, from 11.4% in 2006 to 12.4% in 2007 with Panama. This type of increase would boost income from $960 million (in 2006) to more than $1.3 billion in 2007. Because of the delays, increases in revenue may not be seen until Q2, however.

David Berkowitz, 360i's Director of Emerging Media, told MediaPost that Yahoo already has seen an increase in click through rates. With those early increases, even if their search market share remains steady, the company should see a revenue boost from Panama.

Tags: 360i, paid search, Panama, ROI, search keywords, search marketing, Yahoo

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