Yahoo today announced it will roll out a new version of its search advertising program this summer. According to the company it spend two years and tens of millions of dollars to develop the new service which is codenamed Project Panama.
Those clicks should immediately turn into a lot more cash for Yahoo. It will not say how much. But Jordan Rohan, an analyst for RBC Capital Markets, estimates that if the strategy works, Yahoo will increase search-advertising revenue at least 20 percent right away — about $125 million in the fourth quarter of this year and $600 million next year.
That is a big impact from new software, and it speaks to the complex art and science of running a search engine. When hundreds of thousands of advertisers bid for the attention of hundreds of millions of searchers, little changes can have big results.
It is also a sign of how well Google, Yahoo's rival, has mastered those nuances. Mr. Rohan estimates that Google's ability to draw more advertisers and show the right ads to searchers lets it earn about 40 percent more from every search than Yahoo does.