• by Shankar Gupta , March 7, 2007

Big brand advertisers are getting the most so far from Yahoo's Panama upgrade, which was released in February and includes the "Quality Index" ranking ads according to their quality as well as the advertiser's bid. Fortune 500 advertisers are seeing their click-through rates increase to 4.4% from 2.3%, according to data released today by SearchIgnite and RBC Capital Markets.

Roger Barnette, president of SearchIgnite, said that bigger brands saw a greater increase in click-through rate post-Panama because on generic, non-brand terms, searchers tend to click on brands they recognize.

"For large-brand marketers, the scale of the positive impact was surprising," he said. "It most helped consumer brand marketers with strong brands, because on non-brand terms, people are more likely to click through on terms they know and trust."

On average across all its clients, SearchIgnite reported a 22% increase in click-through rates, to 2.5% from 2%, after Panama was fully released. On average, CPCs rose slightly, to 59 cents, from 56 cents--but larger brand advertisers instead saw a decrease in CPCs, to 16 cents, from 21 cents.

As a result, Yahoo has seen its share of paid search advertising increase slightly, the report stated. Yahoo's market share dropped every month for the last year, from 46% in the first quarter of 2006 to 19.6% in the fourth quarter of that year. It reached a low of 17% during the transition period starting Jan. 1, when marketers were first allowed to start moving to the new system. After Feb. 5, when all campaigns were migrated to Panama, Yahoo's share of search marketing dollars increased slightly to 18.1%.

Barnette said that some of that increase could be attributed to marketers simply testing out the new system, but the data suggest Yahoo can expect to claim a larger share of ad dollars.

"Yahoo can sustain a higher media spend, based on the numbers that most of our marketers are seeing," he said--although he noted that the results are still preliminary.

The report was based on roughly 13 billion impressions and 140 million clicks on Yahoo, Google and MSN starting Jan. 1, 2006 and ending Feb. 24, 2007, across roughly 500 marketers.

Last week, comScore Networks also reported an increase in click-through rates: A week after Panama launched on Feb. 5, sponsored search ads on Yahoo saw a 5% increase in click-through rate over the week ending on Feb. 4. The week ending Feb. 18 saw click-through rates up 9% from the rates the week before Panama's launch, comScore reported.