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Yahoo's Panama Panning Out...So Far

So far, so good for Panama, the new advertising platform Yahoo launched on February 5th.

A new study suggests that click-through rates for sponsored search ads are up and so are sponsored clicks as a percentage of total user clicks on the site. Research by comScore, released today, suggests the system's impact is showing solid results.

The long-awaited and often delayed system was built to better monetize Yahoo search with sponsored links. It is also competing with Google's AdWords for search engine advertising dollars.

The comScore study analyzed the changes in Yahoo's click-through rates for sponsored search ads since Panama's official U.S. launch. By dividing total clicks on sponsored search ads by total searches, comScore found that, compared to the week before Panama's launch, click-through rates rose 5 percent the week ending February 11 and jumped 9 percent the week ending February 18.

The study also showed positive gains for Yahoo in the "sponsored click composition" metric, which calculates sponsored clicks as a percentage of total clicks on the site. Sponsored clicks represented 10.6 percent and 11.1 percent of total click volume in the weeks ending February 11 and February 18, representing increases of 0.5 and 1.0 points.

After a sometimes turbulent 2006, including management shake-ups and a re-organization of some divisions, Yahoo has great hopes invested in Panama's impact on 2007.

During the company's conference call to announce its final 2006 financial results, Yahoo CFO Susan Decker suggested that Panama's complete adoption would lead to increased profitability for the company, beginning in the second quarter. She said that first quarter would be Yahoo's slowest in terms of growth in 2007.

At least according to comScore, however, it's so far, so good. Yahoo did not respond to a request for comment by press time.