• by Bill Wise , January 29, 2007

Last week's Wall Street Journal ran a piece on how Yahoo advertisers are faring as they migrate to the new Panama ad platform. I wanted to give Yahoo the opportunity to talk about the migration in its own words. What follows is my interview with Yahoo's Senior Vice President of Advertiser Products and Platform, Steve Mitgang.

How do you think Panama will impact the Yahoo advertiser and searcher customer experience?

The focus of our old system was pay for placement. After you met the basics for editorial relevance, you'd be in the top spot if you paid enough money. That didn't always lead to the most relevant search listings.

With Panama, the heart of the system is about making the most relevant connection between searchers and advertisers. We're rewarding ads based on relevancy factors, like click-through rate. All things being equal, better ads get better click-through rates; so we're incentivizing advertisers to focus on the quality of the ad message, and not simply on the bid price.

Meanwhile, our old system didn't allow for enough testing. But in our new system, advertisers give us multiple creatives, which we rotate to see which has the most impact. So we have more quality ads to choose from, and ultimately more relevant listings for our searchers.

Everyone wins. Searchers see more relevant ads. As searchers see relevant ads, advertisers get more click traffic. Publishers on our content network get more clicks as well. And Yahoo gets greater revenue through our advertisers' success.

How do you think the Panama migration is going?

I'd say it's going extremely well. We're well ahead of schedule on migrations, with tens of thousands of advertisers using the new system today. And call center volume is below expected, which means that people are pleased.

Of course, every company has customers with concerns, whether you're talking about Apple, Nike, Microsoft -- or yes, even Yahoo. When concerns come up, the most important things for us is to let the customer know how we can help, or that solutions are coming that will satisfy their needs.

One common challenge we've faced is the customers with very specific needs -- customers with unique set-ups that really depart from the norm. Our No. 1 goal is to help them with whatever issue they have as the migration proceeds.

What has Yahoo done to educate advertisers about the migration?

We set out months and months ago to create the best migration possible for our advertisers. We talked to advertisers of all shapes and sizes -- both to educate them, and to understand how to best educate them further as the migration progressed. We have provided every type of communication -- brochures, e-mails, tutorials, letters, live seminars, webinars, and we placed our customer service numbers prominently.

Everything has been built from the customer perspective, and we're working to make sure we get in front of advertisers so they know what's coming, how to deal with change, and how to get help if they need help.

What do you think could have been done better to prepare advertisers for Panama, or to help them along the way as the migration proceeds?

The only thing we could have used is more time. A few days or a few weeks later gives you more cycles [of preparation], and would give you another opportunity to catch that bug or to prepare just a bit more -- not just preparing the application, but readying the customer service side as well.

But all in all, we've done very, very well for an extremely complicated and complex job. And you can see that success in our low call volume to our help centers.

How far do you think Panama will go in helping Yahoo with its corporate challenges?

Like I said earlier, by giving the searcher a better experience, we're also helping Yahoo's bottom line. Panama will help everyone monetize better -- the advertisers, the publishers, and Yahoo.

Beyond that, this is a platform we can iterate on. Our old platform was from 1998, and was built by a startup. It ended up becoming very popular, but it wasn't designed to be what it eventually became. Panama is built with the future in mind: it isn't just for 2007 -- it's for how digital marketing will evolve in the future. We've made it so it can be upgraded very fast, which means any new additions can be rolled out quickly, to better help all of Yahoo's digital advertisers.

So Panama won't just be for search ads?

We designed Panama not only around text and search listings, but around all kinds of digital advertising -- including rich media, mobile, etc. We made it an ad platform, not just search platform.

Will there be offline ads through Panama as well?

I suppose that in theory, Panama's ad configuration model could work for any type of ad. But for now, our goal is to be the first buy for advertisers in the digital world.