Internet search engine Yahoo announced on Wednesday the delay of its proposed new advertising technology, underlining the challenge it faces in trying to keep pace with archrival Google in the online advertising market.

Yahoo said that new ad features, which the company hoped would boost the profitability of its search business, would not be in place in the third quarter as previously expected, but would debut in the fourth quarter.

Therefore any financial benefits from the new search platform, code-named Project Panama, would not be seen until early 2007.

The announcement, along with disappointing second-quarter sales and a weak third-quarter forecast, contributed to a 20 percent drop of Yahoo shares on Wednesday. The company's stock price closed at 25.20 dollars.

The Sunnyvale, California-based company has been under pressure from Wall Street to make more money from its ads, which are placed next to its search results, and Yahoo executives have contended that the Panama platform was the answer.

However, Yahoo is likely to lag behind Google in terms of search profitability until next year at least, due to the delay of the new ad technology.

Yahoo has been maintaining its second-place position behind Google in the U.S. search market, as measured by the total number of searches performed, and even appears to be gaining modest ground on other rivals.

Google's share of the search market is currently 44.7 percent, while Yahoo's market share has edged up to 28.5 percent.

Yahoo is working on Project Panama to better match advertisements to search-result content, for example, creating ad space for a car distributorship alongside auto-related results. The company also plans a system that places ads based on demographic metrics such as gender or age.

However, Google, which introduced to users a new version of its search technology earlier this year, already has these features.

In spite of its share of the search market holding, analysts have said that Yahoo's actual revenue from the ever-increasing online search market had been falling, as Yahoo's profit margins lagged behind Google's, standing at about 29 percent against 33 percent.

In a key measure of respective shares of the Internet search market, Google sites hosted 2.9 billion searches last month, while Yahoo hosted some 1.8 billion queries.

Editor: Yan