"Yahoo's expansion into mobile content delivery and broadband video--as well as a number of other initiatives--will better position the company to compete with Google, AOL, and a host of established and burgeoning sites vying for advertising dollars," said Tim Deal, senior analyst for P&F's Broadband Advisory Services, in a release.
In addition, Yahoo's recruitment of top research scientists who are working on new products and services will also help the company remain competitive, the report maintained.
On Wednesday, at a gathering of media industry executives Yahoo Chairman and Chief Executive Terry Semel said he was pleased with Panama's progress so far, and predicted it would contribute to good first-quarter results. The online ad system, based on technology similar to Google's, launched on Feb. 5. It enables advertisers to pay for search terms based on their popularity, and is considered a linchpin in Yahoo's growth strategy.
Panama is designed to improve the accuracy of search results and boost click-throughs for paid advertisers.
Companies like Yahoo and Google make money by placing ads in a consumer's search results. Each time a person clicks a sponsored link, the search giants get a fee. All search advertising companies look to improve the relevancy of their results so they can attract more revenue.
Early reports of Panama's results seemed to confirm Semel's enthusiasm. Comscore issued numbers showing that the click-through rate rose 5% in the first week after the system's debut and 9% in the second week.
In late February, UBS forecast Yahoo will receive between a 15% and 45% increase in 2007 revenue as a result of Panama.