Will Panama Switchover Dent Yahoo Revenue? And Boost Google's?

Yahoo shareholders, employees, and advertisers are, for obvious reasons, praying that Panama works.  For shareholders, occasional positive comments from customers are nice, but salvation will only come if and when Panama suddenly turbocharges revenue growth.  From the shareholders' perspective, if the system fails to do this,  it will have failed.

Given that the company began to transition customers to Panama in mid-Q4, any revenue acceleration will likely come in Q1 at the earliest.  A nearer-term question is whether the Panama transition will have a negative impact on Q4 (or even Q1) revenue--and whether Google will scoop up the difference. 

In today's WSJ ($), Kevin Delaney suggests that some small Yahoo customers have had to cut back spending significantly during the transition.  The comments are anecdotal, but the idea that the switchover might cause a temporary hit to revenue makes sense.  In one case, moreover, the spending that Yahoo lost went to Google instead:

Imagers, a family-owned Atlanta digital-printing business with a staff of 35 last year spent about $10,000 a month on search-related advertising through Yahoo. After its account was converted to Yahoo's new system around the start of this month, Imagers says Yahoo declined to let the company continue running some ads linked to specific keywords....Imagers says Yahoo customer service wasn't able to rectify the problem immediately, so it slashed spending on Yahoo to about a $700 monthly rate and increased its budget for ads on rival Google Inc.

According to Kevin, it took Yahoo three weeks to fix the problem, and Imagers has now increased its spending back to only 70% of the original level.  If Kevin's anecdotes are reflective of Yahoo's broader customer base, shareholders squinting to see light at the end of the tunnel may have to wait for another quarter or two.

Comments

[Small Business Insider]

I have a small website and sell about $200 /day. i fucking HATE Yahoo's service. I love google. Here are my january stats from an insider small business view:

First number is my visitors, second is checkout conversion rate.

1. google - 846 - 2.84%
2. (direct)- 340 -8.2%
4. yahoo - 98 - 3.06%
5. shopping.yahoo.com - 82 - 0.00%

I hate yahoo because:

I have to dig just to find their keyword ads page and still have to check my email to click the link that its on.

They reject most keywords - wtf? They take forever to approve and don't tell you shit about why they weren't approved. Bitches!

They have low traffic levels

Their reporting sucks. It's not in real-time. I cant look at my spending levels, results or anything in real-time like I can wih google.

It just so much harder to use.

Yahoo has a higher conversion % ONLY.

I reduced my budget to $15 a day with yahoo. i'm about to cut it to $10 because yahoo can suck my fuckin dick. I paid those bitches $299 to be in their bulshit directory becasue the guy from Search Engine watch said it was a good move. What aJackass motherfuckin BITCH that guy is. Anyway.

Oh and get this shit bros. Yahoo charges ou like $100 just to sign up for their ad service. WTF!

I like Google because-

Man it is so fucking easy to use. I really love them. I got kicked off Ebay and Google came to my rescue.

Excellent real time stats.

They approve most key words and let you know right away why they didn't approve some.

You budget $1000 or $100 - you better believe they're going to get you the traffic.

I love how they provide you with so many tools like checkout, analytics, base... All so easy to use and FREE!. I have big Google Checkout logos on my site. I want people to use it. Wonderful Service.

I think their conversion rates could be better. i dont like how they bombard my traffic levels in the morning and not at night. Spread that shit out bros.

I spend $50 /day with Google. I do not use their shady network though. I use google.com only. Their network click rates were like 25% with a .02 conversion.

On another note. Paypal still does 95% of my payments, and i hate those fuckers.

Google Checkout 4.62%
PayPal Direct Payment 53.46%
PayPal Express Checkout 41.91%

[Economic Edge]

The Panama update has been nicknamed "lipstick on a pig" by many affiliate marketers and internet publishers, most of whom agree that the new "update" did very little to solve YSM's problems.

Re: They reject most keywords...
This is the most frustrating aspect of advertising on YHOO. You can have great CTR and conversion for your keywords on Google, and yet YSM will reject many of the same keywords that are doing great on Google. Google makes it easy for advertisers; YHOO makes it difficult.

As a result, advertisers are more likely to spend money with Google and avoid (or severely limit) their spending on YHOO--especially when you consider that Google has roughly 50% of the search market (higher traffic numbers).

[sufiy]

Hi Henry,

Here is my update on Google valuation:

http://sufiy.blogspot.com/2007/01/google-bear-case-update.html

I will be very suprised if they will be able to make better numbers and if the stock will not tank with MC/FCF=85.6

Regards,

Sufiy.

[Phil Pearlman]

i am skeptical of most things in general and frankly even more skeptical of you, hb...

nonetheless, this work on yahoo is excellent reporting, fantastic.

tx,
phil