Panama is the long-delayed upgrade to Yahoo's paid search infrastructure, which went live in early February.

The report's most optimistic estimate--which assumed an acceleration in search volume growth and an increase in Yahoo's click-through rates to 12.4% from 11.4%--predicted a 45% year-over-year increase in the company's search revenue, from $960 million in 2006 to $1.392 billion in 2007.

The neutral scenario, which assumes no increase in click-through rates and a steady rate of search growth, predicts a 20% increase in search revenue.

The least optimistic scenario, which posits no effect on click-through rate from Panama and a decrease in search growth, predicts a 15% growth in search revenue.

The revenue lifts are unlikely to begin to emerge until the second quarter of 2007 because of the delayed launch, the report states.

David Berkowitz, director of emerging media at search engine marketing firm 360i, said that keyword advertisers are beginning to see increases in click-through rates, which will likely increase their spending on Yahoo--even if it continues to lag behind Google in market share.

"Early indications show that since the Panama upgrade, click-through rates have risen," Berkowitz said. "Even if Yahoo's market share stays the same, the improved performance will trigger more spending there."

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