5000 New Competitors Just Landed in Newspaper Markets
Jul 21, 2009
It turns out that newspaper sales forces weren't the only child in the Yahoo APT family. Yahoo Newspaper Consortium members now have a brother, and he's fairly full grown.
Today, Yahoo and ATT announced a deal to enable ATT's 5000 local salespeople to sell display advertising, based on Yahoo's behaviorally targeted (BT) ad engine.
The development is a potential game-changer in the local ad selling game, which itself is in throes of revolution. Just last week, McClatchy announced that digital revenue is now generating 17.3% of its overall intake, and the company has been focused on online-only sales, getting beyond the strictures of bundled print/online buys. Hearst and Scripps have been among the Yahoo Newspaper Consortium members touting their successes with APT, which has doubled prices in some categories. Most significantly, 8000 or newspaper salespeople have been re-trained over the last year, though, clearly only some of them are really actively engaged in selling the new products.
The new local ad-selling mandate: Eliminate the order-taking culture traditional to newspaper companies, and focus local ad salespeople on "consultative selling." You know, understand what the merchant needs and then pull out of your briefcase a tailored program to help them get customers in the door. The biggest prize to be pulled out of that magic briefcase: buying targeted audience in one of more than 300 categories.
Now ATT salespeople will be able to pull the same trick out of their ATT bag.
Is it direct competition?
No, and yes.
No, largely, in the old world. Yellow Pages have largely sold service-oriented businesses. In that old world, YP, broadcasters and newspaper publishers largely co-existed, not worrying much about the overlaps as all enjoyed good margins. Yellow Pages advertising is about 70% service-oriented, says Peter Krasilovsky, a veteran YP watcher. Newspapers, of course, have been more product-oriented, think cars, homes, and big-screen TVs.
Yes, though, I believe, in this emerging new world. With traditional advertising eroding everywhere — on broadcast TV, in phone books, in newspapers — all local ad sellers are throwing the old rules out the window. They are all, to varying degrees of execution, going after more businesses in the local market with more products to sell.
Krasilovsky notes that the "Yellow Pages people are increasingly aggressive going where the newspaper people are," and points to today's announcement that Idearc – home to Superpages.com
and publisher of the Verizon Yellow Pages – has launched an auto portal. Krasilovsky is skeptical that today's Yahoo/ATT deal will make major marketplace difference soon. He says that YP salespeople are used to walking down the block, selling everyone, and have learned how to sell "eight or nine" products, on both points distinguishing themselves from newspaper salespeople. Those facts, and the historic service/product distinction, lead him to believe the competition won't be, well, that competitive.
and publisher of the Verizon Yellow Pages – has launched an auto portal. Krasilovsky is skeptical that today's Yahoo/ATT deal will make major marketplace difference soon. He says that YP salespeople are used to walking down the block, selling everyone, and have learned how to sell "eight or nine" products, on both points distinguishing themselves from newspaper salespeople. Those facts, and the historic service/product distinction, lead him to believe the competition won't be, well, that competitive.
Until a year or two ago, I might have agreed. Newspaper people used to sniff at smaller businesses, saying they were too small to go after.
Now, as I talk with them, I hear how they've recognized that Google and Yahoo self-serve have created a new market. SMB — small medium businesses — are a big target, for them, I'm told, repeatedly. They are actively working re-seller deals with companies like Yahoo, Google, WebVisible, ThePort and others, eager to find scalable ways to reach those new businesses, to becoming successful consultative sales companies. Re-selling other inventory in addition to their own site inventory (selling Yahoo.com inventory is a major part of the Newspaper Consortium deal) is another key, they believe.
Newspaper publishers, YP publishers and broadcasters are all re-shaping their businesses. First comes cost-cutting (that's what was behind the "surprising" Gannett and McClatchy earnings this past week, not revenue growth). It 's the re-shaping of the local sales pitch, though, that is the growth intiative. The hope: a re-shaped local sales program, a great new bag of sophisticated ad tricks, will pay big dividends when an economic recovery finally kicks in.
So newspaper publishers, it looks like, got a head start. They're still in various stages of implementation with Yahoo. There have been many hiccups along the way. On today's Yahoo quarterly call, even CEO Carol Bartz acknowledged that APT had "overpromised."
"We have thrown a lot of bodies at this because it is [technically] inefficient," she said. "Next year," she hopes to move out some of those bodies, but Newspaper Consortium members will tell you that more people — support people — are needed, as Yahoo grapples with its new role as vendor.
In addition, the jury is still out on how much incremental revenue, again in which categories, at whatever pricing, sticks in the market. The answers are absolutely fundamental to the numbers newspaper companies will be able to report in 2010.
Overall, though, today's Yahoo/ATT deal represents new competition for beleagured newspaper companies.
Once ATT sales reps got up to speed (and that's certainly an intriguing question, given the newspaper company implementation experience), they'll be competing head-on with newspaper reps. Open up the Yellow Pages, and browse through furniture dealers, appliance sellers, home services of all kinds now coveted by "newspaper" companies. Sometime in 2010, that local furniture dealer will be seeing a newspaper rep one day, selling newspaper space, local online news site space and Yahoo-inflected products. The next day, the same dealer will get a visit from a YP rep, selling YP space, online site space and Yahoo-inflected products. Maybe, in 2010 or 2011, local broadcast sales people will join them, if Yahoo believes they would add to the mix.
That's today's picture.
The next shoe to drop may well be Yahoo's expected hook-up with Microsoft on search. If that partnership develops, Yahoo will presumably focus on APT and the display side of the business and Microsoft, using Bing, will power search — replacing, we would think, the Yahoo search and paid search most of the Newspaper Consortium members use. Lots of potential plusses and minuses to work through there.
In the meantime, Yahoo can claim to have grown its local salesforce — at relatively small incremental cost (most of the ad selling is on a revenue share basis) — by more than 50%, and newspaper companies have gotten still another spur to transform their businesses more quickly.
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In a digital world, the print format for both YP ads and Newspaper Classifieds becomes increasingly passe. Users of ads of both media in digital sites are motivated by category and geography. Your observation that AT&T’s new 5000 sales force is another spur to short term Newspaper transformation is spot on. Newspapers,collectively, should consider condensing YP’s hundreds of listings into some 10 to twelve categories, i.e. Personal Services, Healthcare etc. While Newspaper’s still continue to offers print editions and distribute TMC products, they should once a week distribute a new product that displays all 12 Categories with free listings of all local businesses within them. Editorial content pertinent to each category would also be included. A prototype of such a product was done a few years back in a market that had common ownership of a YP and Newspaper franchise. This product becomes the cross promotional product for Newspapers to lead consumers to the newspaper’s web site and mobile platform with paid ads in each category. Two essential elements in the web and mobile efforts are more in depth interactive content features (store reviews, special daily/weekly, promotions etc) and mobile GPS directions leading consumers to the closest appropriate business). If this concept was adopted by newspapers collectively, it also opens the door to many national advertisers who advertise locally, i.e. Ryder. Newspapers, given a head start could sieze the market as YP selling has traditionally been done on a “premise” sales basis vs newspapers ongoing presence in the local market.
As someone who has spent the past 12 years working in print media, the problems of this industry go far deeper than ads transitioning from print to internet. Traditional advertising on the whole is dying, and it doesn’t matter how many team-ups or new sales efforts come along, nothing’s going to change that. As the technology improves, the ability to escape advertisements increases, as does the ability to successfully market your own business without the need for a third party to promote what you do. There’s a reason why newspapers have tended to stay away from small local businesses; one, they are small businesses who generally don’t have much money to spend on advertising, and two, once they reach a certain amount of business, unless they are interested in constantly growing and expanding, they have no need to advertise. Most of these businesses are just regular people happy to earn a living, they’re not looking to turn into giant corporations, and once they hit the saturation point on the amount they’re willing to work, they’re not going to further promote themselves. Small local advertising is far from the panacea that its being touted as. In fact, I would argue that it’s the last ditch fall-back position for giant media companies desperately looking for advertising dollars before falling completely by the wayside. Besides, what you’ve described here, with a salesperson pushing an array of complicated options for the yellow pages one day, one pushing another complicated package of stuff for Yahoo or some other place the next day, and another one pushing yet another package for the local newspaper the next day to me just sounds like a massive annoyance to small businesses trying to get by, not to mention a highly competitive situation that’ll likely drive prices down even further. While currently, there’s money to be made in the here and now, none of this is a long term strategy as the game will continue to change.