Media General Exec, Analyst Agree Google Ad Programs Are Good Deal

By: Mark Fitzgerald Media General's top online strategist and a leading Wall Street analyst told somewhat skeptical publishers at the now-concluded Inland annual meeting in Chicago that partnering with Yahoo and Google on ad sales is a good deal for newspapers.

"If I can get Google to reach millions of users I could never reach and could never sell to -- why not?" said the analyst, Paul Ginocchio of Deutsche Bank Securities.

Similarly, Rusty Coats, Media General's director of strategic initiatives, argued that partnerships are a must for newspaper online ventures. "We need to be fairly promiscuous with our partnerships, and figure out which ones we want to stay with for the long term," he said.

The continuing and perhaps permanent slump in newspaper classified only adds urgency to the need to hook up with big aggregators like Yahoo or Google, Coats said. "Classified has been a giving tree for us for many years, and I'm afraid we're down to the trunk of that giving tree," he said.

But the online ad programs have the potential to pump new money into online classifieds -- and raise the low price of online ads measured by cost per thousand (CPM), Ginocchio argued.

Remnant ad space that now fetches just 75-cents to $1 will become more valuable because "aggregators can dice and slice it into individual tranches that could be premium priced," Ginocchio said. The CPM price could double, he added.

Assuming no radical changes in advertising income, the Yahoo ad program could add as much as 36% in income in the next few years, Ginocchio estimated.

However, newspapers will have to change some online practices if they are to take advantage of the aggregator's reach, Media General's Coats said.

For one thing, newspaper must standardize the taxonomy of their sites to make it easy for big buys across the industry. All of the Media General sites, for instance, have standardized search so that, for instance, sports is one of 17 top tiers, while high school sports is one of 117 secondary levels.

"We all agreed before on some things," Coats said. "We all agreed on the inverted triangle to tell stories. We agreed that inserts go inside a newspaper, not on the outside. Well, let's agree on some other things online so that we can maximize revenue going forward."

Newspapers need to understand that if they deviate from a standard format "you're going to slow down the business across all our properties."