Yahoo's long-awaited - and belated - ad-serving platform update, dubbed Panama, has finally been launched. The first phase of the launch consists of a new interface; the new ranking algorithm is expected to go live early next year.

Some of Yahoo Search Marketing's U.S. advertisers have begun asking to switch to the new system, and more will be invited to migrate through early 2007, Yahoo CEO Terry Semel announced during a conference call discussing third-quarter earnings, MediaPost reports. "We believe that through this platform we will be able to unlock the full potential of our large global user base and improve our search monetization capabilities," Semel is quoted as saying.

The migration to the new system will be via invitation, but advertisers can request an earlier switch, writes Marketing Pilgrim. Once the move is made, there's no going back, however. Panama's new ranking algorithm will be launched in 1Q07 and will use a Quality Index with a 1-5 scale of an ad's ranking based on ad quality and bid price.

Panama's interface is intuitive and the graphical representations will make it easier for new advertisers to get started (see graphic), according to Marketing Pilgrim, which adds that Google should be a bit concerned.

Yahoo's stock climbed nearly 3 percent, to $24.83, in after-hours trading. The financial impact of Panama's gradual implementation isn't expected until 2Q07, according to Yahoo CFO Sue Decker.