• by Tameka Kee , June 5, 2007

Despite industry speculation, the imminent departure of Yahoo Chief Technology Officer Farzad Nazem has not yet impacted the company's growth plans for its Panama advertising platform, as evidenced by the rollout of its Search Marketing Commercial API Program.

Through the program, Yahoo has granted both individual developers and businesses access to a series of application program interfaces (APIs) so that they can fine-tune Panama to their specific needs.

"An API allows advertisers to make bid changes using specific tools or software," said Ben Kirshner, CEO of Elite SEM. "It makes the performance management process easy and fast for everyone on the platform, from developers to SEM firms, and even small business owners."

The program offers three levels of service--Basic, Advanced, and Elite--each with varying degrees of technical and sales support. Although monthly fees are associated with business development services for the top two levels, according to Yahoo, "API access for typical campaign management activities" is free.

"Our objective is to provide free access to everyone, because we designed this program to encourage innovation across the entire spectrum of businesses within the Yahoo ad network," said Dan Boberg, Yahoo's managing director of sales technology.

Boberg said Yahoo has built the system to scale on a "level substantial enough to support the growing ecosystem of advertising partners," and the company also has plans to incorporate the APIs of Right Media and a number of its publisher partners into the program. But some in the industry question whether Yahoo will be able to sustain free access in the midst of exponential API activity.

"Transactions on Google's API used to be free," said Kirshner, "but now we have to pay for every action or request. Clients are asking why there's a cost in addition to their keyword spend, and when we explain where the extra fee comes from, it seems as if they're being penalized for adjusting bids."

Currently, advertisers on Google's AdWords program must pay $0.25 per thousand API units consumed, regardless of size. Search insiders say the cost is most likely a result of the sheer volume of API activity for AdWords, and note that advertisers at the Elite level of Yahoo's program will pay $0.10 per thousand API requests "if excess quota is needed."

Still, Boberg reiterated Yahoo's commitment to keeping access to the API free. "Our approach is to not charge for capacity at all. We only charge if you need value-added engineering services--and we don't foresee many instances where our partners will have a need for excessive API requests."

Yahoo launched Panama as a direct competitor to Google's ad programs, and though its impact on the first quarter's profit expectations fell short of investor expectations, the company has secured a number of major advertising partnerships in recent months.

From a lucrative ad deal with Viacom, to a multi-paper partnership with McClatchy for local classified ad distribution, and now, with the open access Search Marketing Commercial API Program, Yahoo seems to be focusing on a core strategy of building "open" relationships with developers, agencies, and marketers. "That is the fundamental difference in our approach to the business from our competitors," said Boberg.