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Yahoo is in the process of upgrading some sponsored search accounts to their new “Panama” system, but one result may be a loss of control over the bidding process.

In speaking with Yahoo about potentially upgrading some of our accounts we learned that while the new system will not allow bidding for specific position, there will be no fundamental change to the way positions are determined when sponsored listings are displayed. So, for users of the old system, the reporting within the Yahoo Search Marketing interface which shows you’re current bid/position along with your competitors bids/positions will be inaccurate. This is because there will be “phantom bidders” –the users of Panama– who’s bids will not show up in the old interface. So you may think you are in position 2, but in reality there could be any number of Panama bidders ahead of you, and you’ll have no way of knowing.

What’s more, the Panama users will not be bidding for a specific position. They will enter a bid amount, but the system will return to them an estimated range of positions they should expect at that bid level–similar to Google AdWords now. Once fully implemented the system will take into account relevancy factors like ad copy, and click-through rates on your ad, along with bid level, to determine your ultimate position. But, and this is the scary part, that system will not be in place until every one moves to Panama. So, Panama users will actually be in a specific position based solely on their bid, but they won’t know what that position is.

Panama users won’t know what position they are in, and the old system’s users won’t even know the Panama users are there. Sounds like a problem to me.