After Exec Changes, Still Woohoo! on Newspapers

By: Mark Fitzgerald When Carol Bartz replaced Yahoo co-founder Jerry Yang after his brief and tumultuous return as CEO ? prompting the departure of Sue Decker, the high-profile champion of the Yahoo Newspaper Consortium ? many publishers wondered if their online ad partnership with Yahoo was suddenly on borrowed time. Already nervous newspapers were only made more jittery when, as of Feb. 28, Google killed its Print Ad program that offered advertisers print display ads in more than 800 papers.

Now Yahoo is on a charm offense to convince publishers that it has no intention of abandoning the consortium ? especially now that it is rolling out the behavioral targeting APT ad platform. Lem Lloyd, Yahoo's vice president of the U.S. partnership, went from newspaper to newspaper in February, reassuring them, as he tells E&P, that the program is "a well-functioning deal, and it's got a lot of legs to it.

"We're exceeding budget expectations on the news-paper deal," he says. "It's seen really positively inside Yahoo ? and we think outside, too, when we talk to analysts, for what it does for our overall share of ad spend."

He notes that Bartz, just a couple of weeks into the job, mused that she wants Yahoo to pursue "more big-picture ideas and opportunities like the newspaper consortium."

The kicker is that Bartz herself is going to Las Vegas for the meeting of newspaper consortium leaders in March. That tells newspapers that they are "one of the first priorities on her watch," A.H. Belo Chairman and CEO Robert W. Decherd told analysts in mid-February.

Belo Executive Vice President Donald F. "Skip" Cass adds that had changes at the top occurred a couple of years ago he'd be more concerned, "but now that the investment has been made in the product, companies like ours essentially have it implemented, Yahoo has a revenue stream based on the [sales] relationships that we have, and they need to use the exact same technology, and [newspaper] sales staffs to sell behaviorally targeted advertising on their own sites."

New management looking for programs to cut would be unlikely to focus on the APT platform, considering that Yahoo has already paid for development and now is getting revenue as newspapers use the technology, Cass argues.

This sense that Yahoo has as much skin in the APT game as newspapers convinces MediaNews Group CEO William Dean Singleton, an early and enthusiastic cheerleader of the partnership, that newspapers can count on continued support. "Both sides have invested so much that I just got to believe there will be support there," Singleton said, in an interview ahead of that March 9 meeting with Yahoo.

Certainly, the newspaper industry has shown its support. By February there were 796 newspaper members in the consortium, representing roughly 40% of U.S. daily circulation.

Yahoo says that in the beta testing of the APT ad management platform ? conducted among a relative handful of newspapers without the automation features, and drawing only on Yahoo ad inventory ? newspapers generated $20 million in incremental revenues. Belo reported earning $1.2 million in the beta stage, and nearly all of that was just from The Dallas Morning News.

"Now we've got the ability to use their software to really, if you will, target and segment our own customers on our own Web sites, which in addition to giving us a lot more opportunity has a much more lucrative value because that's content and ultimately inventory we're creating on our own," Cass told analysts.

Belo, with just three dailies, was the first to implement APT company-wide, but the rollout picks up speed this month with debuts scheduled at numerous papers and groups including The New York Times Regional Group, Lee Enterprises, Media General Inc., The Philadelphia Inquirer, the Daily Herald in suburban Chicago, and The Columbus (Ohio) Dispatch.

One unexpected result of the Dallas Morning News' APT beta testing was a spike in automotive advertising, which has virtually collapsed in print classifieds industrywide. Early adapters are finding other surprises in this grim advertising environment, Yahoo's Lloyd says: "A lot of newspapers, when we talk to them, say they're seeing money being freed up that they never thought they had a chance of getting. There's a lot of share-shift, with newspapers taking share from broadcast local TV, cable, and outdoor."

The reason is that local advertisers are responding to the pitch that newspapers in print and online typically reach 80% of the market, and can now bring behavioral targeting tools to bear to find customers in that reach, Lloyd adds: "That's a strong combination that's resonating with local advertisers ? and they're rethinking their ad dollar allocation." Given the segmenting capabilities of the platform, hyperlocal ad sales are emerging as a big trend, he says. And they have money to spend: dentists, health clinics, and one-time events like boat and RV (recreational vehicle) shows are among the categories generating $10,000 to $30,000-level contracts, he notes.

"Online budgets," Lloyd says of early adapting newspapers, "are larger than they thought."