Since the release of Panama, the announcements of its less-than-stellar Q1 profits and Google's acquisition of DoubleClick have many analysts giving Yahoo! a skeptical outlook. In light of Google's ever-growing empire and Yahoo's disappointing Q1 earnings, can Yahoo still succeed? The results of a recent survey conducted by Chicago Interactive Marketing Association (CIMA) in conjunction with William Blair & Company may make you wonder.
The verdict of CIMA's research
Overall, the state of our interactive marketing industry is strong with 2007 growth predictions near 19 percent and our industry's health rated a virile 4.13 out of five by CIMA members. So what does this mean for the Goliaths that propel our industry's search dollars?
In 2004, Google accounted for 51 percent of searches through its own site and AOL, whereas Yahoo accounted for 43 percent of searches on its own property and MSN. This gap widened drastically in the following years with Google now controlling 64 percent of all search activity. In this year's CIMA study, only 16 percent of respondents characterized Yahoo as the best-positioned portal or search engine, versus 30 percent last year. Google was considered best-positioned by 56 percent of respondents. However, with its release of Panama, Yahoo is shaping up to give Google a run for its ad dollars.
The CIMA survey revealed that 71 percent of participants rate Panama's new user interface as "similar or better than Google's." Why? When asked, "What new feature in the Panama system will have the most positive impact on your business?" the more than 100 CIMA members who participated in the survey responded with: Campaign Grouping, Fast Activation, Keyword Insertion in ad units, and Graphical Forecasting and Bidding Tools. As a result, the CIMA study also revealed that 48 percent of surveyed members indicated they would increase their spending with Yahoo.
Panama and the triangle of benefit
Another reason for the positive peer review of Panama could be Yahoo's realization that in order to move ahead of other search engines, it needs to serve more than just its marketing/agency clients. Truly effective media models create unique advantages for each of the three core media constituencies: marketers, publishers and consumers. Yahoo seems to have recognized this by outfitting Panama with new features that integrate each media constituency while appealing to each individually.
Panama offers marketers the ability to test multiple ad versions to determine which message generates increased CTR and impressions. In addition to the features highlighted in the CIMA research, Panama provides an interface that enables marketers to clone Google campaigns and seamlessly import and apply learnings.
For publishers, Panama's ability to provide increased relevance means higher clickthrough rates. Thus, it will yield more revenue. Publishers are already starting to realize the revenue potential, as evident by the recent exclusive agreement between Viacom and Yahoo for sponsored search and contextual ads.
And lastly, consumers experience faster, more relevant search results due to marketers being better able to manage their creative messaging. Additionally, some of Panama's geo-targeting search capabilities will provide for a better user experience.
The right move
With the purchase of Right Media Exchange, Yahoo provides further opportunity for advertisers, publishers and advertising networks to generate more value from the online marketplace. Right Media will allow Yahoo advertisers greater inventory and audience options as well as increased transparency into the buying process. Publishers will have the ability to immediately capitalize on increased marketplace demand and enable optimal returns on each ad placed by marrying their ad inventory with the exchange's and Yahoo's. Advertising networks will enjoy the same advantages as advertisers and publishers while also giving them a chance to compete with top players due to decreased friction and increased transparency.
What does this all mean for our industry? For starters, it means that -- despite the fact that Googling has become a recognized verb synonymous with web searching -- Google's stronghold on search advertising hasn't taken the fight out of its key competitors. With Panama, marketers can now meaningfully test their message efficacy on Yahoo and shape their online spots toward their consumers' preferences. Publishers will generate more revenue from each page view. Consumers can find what they are looking for with greater speed and accuracy, and with results that are more targeted to their queries.
Yahoo has given the marketplace and consumers a worthy complement to Google. Today, I'm betting that Panama will help Yahoo close the gap with Google in the coming months; and not only because 71 percent of CIMA participants rated the Panama user interface as similar or better than Google's. Yahoo will overtake other smaller competitors that have been grabbing share by appealing to one or all of the three key constituencies. At the end of the day, Panama creates competition, and that's good news for the entire industry.
Matt Spiegel is the managing director and founder of Resolution Media. .