Yahoo’s Newspaper Partnership ExpandsBack to News

The numbers are getting harder and harder to ignore. Internet ad revenues grew 35% in 2006 to nearly $17 billion and grew another 25% in the first quarter of 2007, according to the Interactive Advertising Bureau. Online classifieds gained 43% to more than $3 billion in total spending for 2006.

By contrast, total newspaper advertising revenues slipped 0.3% to roughly $50 billion in 2006, and that’s still inclusive of a 31.5% increase in newspaper online advertising. According to the NAA, online revenues accounted for only 5.4% of total advertising revenue for newspapers last year.

It’s not difficult then to realize why newspaper publishers continue to recognize value in partnering up with online giants such as Yahoo, Google, Monster and CareerBuilder to help bring additional ad dollars to their top line, and there remain few large public or private newspaper publishers who have yet to declare their allegiances.

Six more newspaper companies threw their hats into the ring this past quarter. GateHouse Media, Paxton Media Group, Herald Media, Tribune-Review Publishing Company and Times-Shamrock Communications have also announced their joining of the partnership. CNHI announced in May its intention to partner with Monster Worldwide for online recruitment advertising for 145 of its publications. Monster has partnered with more than 200 newspapers since July 2006.

While newspaper participation in the Monster and CareerBuilder partnerships is limited to online recruitment advertising (for now), the Yahoo partnership – now 17 companies strong – seeks to go further.

What sets the Yahoo partnership apart from others is how deeply it seeks to integrate with newspapers’ core strengths – robust news content, brand recognition and their relationship with advertisers – all on a local level. What does Yahoo bring to the table? According to Hilary Schneider, executive vice president of marketplaces for Yahoo, the media company provides “digital distribution, reach, product functionality and go-to-market strategy.” In other words, if local newspapers are the brains, then Yahoo wants to be the brawn.

But Schneider is quick to point out that the newspaper partners are the ones in the driver’s seat. “All the controls and levers are really in the hands of our partners,” she explains, “in terms of when they want us to sell inventory, when they want to sell our inventory, how we integrate their content, and how we drive that audience back to their websites.”

The specifics of the partnership can be simplified into four basic categories: advertising, content, search and local products.

Advertising. Participation in Yahoo’s HotJobs network for online recruitment ads was the founding principle of the consortium. Classified advertisers in the members’ newspapers have the ability to post those same jobs on the national HotJobs network, significantly increasing the reach of local job posters and giving local newspaper sites access to Yahoo’s robust online recruiting platform.

Eventually, the relationship will extend to “ad-serving” which means that Yahoo’s sales team will be able to sell national advertising onto the local newspapers’ sites in the form of banner, button and rich-media ads, as well as into the print publications.

Yahoo’s highly accurate ad-targeting technology, when combined with the data on users that local newspaper sites gather, will create a very compelling sales pitch for local and national advertisers alike.

This year, Yahoo plans on holding 51 seminars for 3,000 newspaper employees to begin training on sales products. Many in the industry consider this aspect of the partnership to be the most compelling.

Content. Locally generated news content is what primarily drives readers to newspapers’ web sites, and sharing this content widely is a concept that many newspaper owners have been reluctant to embrace. Under the partnership agreement, local news content generated by member newspapers would be digitally distributed across the Yahoo network, allowing Yahoo users interested in local sports, news and finance to have access to the stories. Improved local site statistics – unique visitors and page views, primarily – help drives online ad revenue.

Search. Yahoo’s robust search technology will power searches originating on local newspaper websites. A boost to ad revenue comes with paid search, which allows local advertisers to pay for a link to their services on the search results page. The “sponsored” link typically has premium placement above other search results.

Local Products. Local newspaper websites will offer Yahoo products such as Yahoo Local Listings, Yahoo Maps and Event Listings, with the intention of essentially making the local sites the homepages for area residents.

It has been reported that the partnership has a five-year term with another five-year renewal option. With members’ participation in the HotJobs network now fully established, the consortium announced plans in April to expand the partnership to ad serving, paid search and content distribution. When and how quickly this important next phase gets implemented remains unclear. But what is clear is that the progress of the partnership will be closely watched and monitored for signs that this is the panacea that fully integrates newspapers into the digital age.