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2006 has been a tough year for Yahoo! The rough public relations ride started January 24 when CFO Susan Decker stated “It’s not our goal to be No. 1 in Internet search. We would be very happy to maintain our market share.” Derisive comments that Yahoo!, in effect, was saying “we’re OK being number two” led to heated discussions in industry forums and blogs. Then, through 2006, the much-anticipated launch of a new user interface for clients of its Sponsored Search system (code-named “Panama”) faced repeated delays. The online community was relentless on this issue.
The release of Panama, touted as vastly superior to the Overture legacy “Direct Traffic System,” was rumored to be facing delays into 2007, when Yahoo! finally announced a phased release on October 17, starting with a limited number of advertisers. This approach is likely a wise choice given the problems MSN had with its own new system release in 2006; however, advertisers are clamoring for immediate access. Panama will move advertising from straight bid-for-placement to incorporate landing page relevancy and other factors into ad positioning, and promises to provide a visible “quality index,” showing exact landing page scores.
Steve Mitgang from Yahoo! has said the new system would allow for distribution “across all of our unique marketplaces, communications and social media assets.” The “social media assets” reference signals the probable focus for Yahoo! in coming years.
In the midst of “we’re No. 2″ and the Panama PR nightmares, Yahoo! managed to keep moving forward at full speed with other initiatives – the release of Yahoo! Go for mobile applications, improvements to their free email service, an upgrade of the popular Yahoo! Music, and incorporation of many intriguing social products into “My Yahoo!” and “Yahoo! 360.” These, and other moves, leave many thinking Yahoo! may have a considerable lead over both Google and MSN in social networking. With Panama’s improvements and the anticipated growth in social media adoption in 2007, Yahoo! will be well positioned not just to maintain, but grow, what historically has been a very loyal audience.