Yahoo Inc.’s new search marketing system continues to gain momentum with an announcement that Viacom Inc. plans to use the system on all of its 33 Web sites.

Yahoo will be the exclusive provider of sponsored search and contextual ads for the sites which include MTV.com, VH1.com, Nickelodeon.com, Comedycentral.com, BET.com and others. The multiyear deal could be expanded to over 140 additional Viacom Web sites around the world, the companies said.

Yahoo will serve up the ads using Panama, its new ad-ranking system launched in February. Panama displays ads in order based on a fee the advertiser pays plus the ads’ relevance to the search query. Previously, Yahoo displayed ads based only on the advertiser fee.

So far, the new system seems to be working out well for Yahoo. Within the first weeks after Yahoo started using Panama, Web surfers were already clicking more often on ads, according to research from comScore Networks Inc. The click-through rate on Yahoo ads increased 5 percent in the first week after launch and nine percent in the second week, comScore said.

While Panama so far appears to be delivering better results, Viacom may have had other reasons for choosing Yahoo, at least over Google Inc., one of Yahoo’s biggest competitors. Viacom recently sued Google, looking for US$1 billion in damages, for copyright infringement from videos that are posted on YouTube.com, the video-sharing site that Google owns.

Yahoo expected to have upgraded all of its U.S. customers to Panama in the first quarter, with hopes to begin upgrading non-U.S. advertisers in the second quarter.



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