Yahoo Delays Search Marketing Overhaul

Yahoo chairman and CEO Terry Semel Tuesday said the company was pushing back a planned upgrade for its search marketing division until at least the end of this year.

The upgrade, code-named Project Panama, is expected to bring Yahoo's search platform more in line with Google's. The new platform will allow advertisers to rotate in different creative units for the same keyword, and will offer a new ad control panel and better means to monitor and forecast campaign results, among other features. Earlier this year, Kelsey Group analyst Matt Booth told OnlineMediaDaily that the new system would likely result in an immediate 15-20 percent increase in revenue.

Yahoo previously said it planned to roll out Panama in the third quarter, but Semel said during Tuesday's quarterly earnings call that the company was delaying the rollout to prevent disruption in ad purchasing and management during the holiday ad season.

"We think this is the right decision for ensuring the most successful commercial launch possible," he said, adding that advertisers should prepare to start using it in 2007.

The move surprised many search industry observers, especially because it appears that Yahoo has little reason to delay upgrading its platform when doing so will position the company to compete better against Google.

At the same time, the delay also doesn't hurt search engine marketers, said Josh Stylman, managing partner at Reprise Media. "It's a pretty intense platform change," he said. "Frankly, we'd rather make sure that it gets released properly and in a stable environment, rather than rushing it out before it's ready."

Yahoo's net income in the second quarter totaled $164 million, or 11 cents a share--in line with projections. Revenue from the quarter was $1.12 billion, up from $875 million in the same quarter of 2005.

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