Can Yahoo Overtake Google in the Ad Battle?

Yahoo is reminding everyone they’re still in the ad game, releasing APIs and the first-ever public statement regarding Project Panama. The news come a week after Microsoft re-launched and re-branded Microsoft AdCenter, which boasted impressive new features. Is it a coincidence Project Panama finds itself making waves right on the heels of AdCenter, or is Yahoo announcement meant to remind everyone they’re still a player in the search engine ad wars? I vote the latter.

Yahoo says the APIs for the new ad system were released today to ‘allow service and tool providers to prepare for the changes’. It’s viable, but I doubt it. Whatever the reason, Project Panama will be the first major update to Yahoo! Search Marketing in years and it has plenty of people excited.

Danny Sullivan and the SEW gang did a good job breaking down Yahoo’s Panama update and highlights what it could do for search engine. Danny says users won’t see a real glimpse of Project Panama until this year’s third quarter, but once implemented the update will include keyword grouping enhancements, better scheduling capabilities (no 3-day waiting periods), new conversion tools, geo-targeting, and (eventually, but not out of the gate) a new quality-based ranking model that (like Google) will weigh both the bid amount and the click-through rate.

The new system is also being modeled to be handle graphics, video content and click-to-call capabilities in its ads, not just text.

But will all the new features be enough to put it ahead of Google in the ad battle? Though Yahoo was considered The King of PPC at its height, the service has lost ground to Google over the past few years. Current numbers show Google earns 30 to 50 percent more from every search than Yahoo. Will the updated service be enough to turn that around, or is it too late?

Analyst Jordan Rohan told the New York Times that if marketed correctly, he believes Yahoo could increase its search-advertising revenue at least 20 percent immediately, generating approximately $125 million by the fourth quarter. Generate more revenue, sure, but overtake Google?

I think a revamped Y!SM will increase competition quite a bit, but I question if it will be enough. When it comes to gaining top placement, I just don’t think it’s a matter of features. If users were playing a features game, I think Microsoft AdCenter would be leading the pack. Granted, the new features were implemented just last week, even the success of the launch was nowhere near as impressive as a Google launch would have been. AdCenter will never get the attention it deserves because it was released under the wrong brand – Microsoft.

Just talking search – MSN was voted the most relevant search engine last week, beating out all major competitors, including Yahoo and Google. But no one uses MSN for their searching needs. Why? Because it’s not Google. The way to beat Google isn’t to match Google, it’s to be irrefutably different and undeniably better. Aside from its ability to handle video, Y!SM doesn’t do that.

Yahoo! Search Marketing will surely have an easier time fighting Google for market share than Microsoft AdCenter will, but is it really possible for them to reclaim the top spot? That’s up to the users. They’ll decide what’s more important – more targeted ads, or the Google name.

Lisa Barone is a writer, content marketer & VP of strategy at Overit Media. She's also a very active Twitterer, much to the dismay of the rest of the world.

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