Advance Internet’s Microsoft Deal Shows Local Ad Sales Free-for-All
Important Details: Paid content — getting new revenues from readers — is getting the lion’s share of attention this summer. Yet, news companies’ moves to transform their local sales operations from print+ to full-bore digital continue apace.
The latest evidence of that push is the announcement that Advance Internet is partnering with Microsoft. With that news, we see how one big newspaper player sees its digital future. Further, we get a sense that Microsoft, a heavyweight that may seem to disappear from the ring, but always makes a comeback, is once again looking for news industry alliances.
Advance Internet, which operates as a division within Advance Publications (Conde Nast magazines, American City Business Journals), is bringing the company’s 30 newspapers into the deal, leveraging both those papers’ sales forces and content. Among the major properties are sites and papers in Cleveland, New Orleans, Portland, Newark and Alabama.
Microsoft’s Peter MacDonald, who is its PubCenter Director of Business Development, Advertiser and Publisher solutions, tells Outsell that Advance is the first major local news company to join the Microsoft Media Network as a re-seller. Advance properties join broadcast and Yellow Pages companies as local ad resellers. Its agreement includes:
- Advance Internet’s own digital sales team, and at some point, some of the company’s print reps as well, will sell into the Microsoft Media Network, encompassing all the Microsoft sites. This is the centerpiece of the deal and allows Advance to greatly expand reach for local advertisers.
- Advance Internet will use the capabilities of the Microsoft ad technologies — among them behavioral targeting (BT) and re-messaging (following would-be customers as they move about the web)
- The deal connects Advance and Microsoft directly on paid search products. Microsoft will deliver its text ads both through its paid search and contextual-reading ad products. Microsoft paid search ads will replace Google paid search on Advance sites.
Peter Weinberger, president of Advance Internet, emphasizes the independence the deal offers his company. “We wanted flexibility,” he told Outsell. Advance Internet is maintaining its own ad platform, currently powered by 24/7 RealMedia, and integrating with Microsoft. Weinberger won’t specify what parts of the deal involve exclusivity or the duration of the contract.
Implications: With a hint of economic recovery in the air, we’re seeing new armies in formation going after a big prize: local online ad revenues. The Yahoo Newspaper Consortium was the first, big initiative to organize around that prize. This Microsoft/Advance agreement and lots of local SEM reseller efforts provide more evidence.
For newspaper companies, the initiatives are an acknowledgement that they need networks for growth. Clearly, their own growth has stalled, both in online revenue and in online usership, with most news sites pulling in 12 minutes a month in most cities, according to Nielsen data, as compared to four hours or more in print a month.
So the solution: sell Other People’s Inventory and networks; in Advance’s case, Microsoft’s, and use state-of-the-art, partnered ad technologies to do it. The technology is key: Newspapers’ strength is in non-targeted display advertising; they’re minor players in the fastest-growing online ad segments of paid search and direct marketing. The new math also has the potential to be compelling — many smaller advertisers never could afford print. The trick: selling and managing many more advertisers — at lower price and margin — than in the good old days.
The issue: broadcasters and Yellow Pages companies see the same new (online-created) opportunity to blur traditional sales boundaries. So it’s becoming a free-for-all in the retail and service ad marketplaces.
So it’s a race, a “consultative” sales race. As I talk to newspaper publishers, broadcast execs, YP honchos, all tell war stories of how hard it is to transform their legacy sales forces. How do you re-train “order-takers” for the new world order of selling targeting, networks and re-messaging? It’s a race of turtles to some degree, but it is to those competing turtles that the Yahoo and Microsoft have turned, as ironic as that is in lots of ways.
Finally, it’s worth noting Microsoft’s strong re-emergence in the local marketplace and the news-oriented local marketplace. The company was one of the first out of the chute with its innovative Sidewalk local directory in the mid-’90s, later abandoning that effort. Now, though the #3 player in search, it is making a big, new bid to play. If its search alliance with Yahoo passes regulatory muster, it will share the junior half of a duopoly with Google — and it will power the majority of paid search among U.S. newspapers. Microsoft has always been challenged by ad-based business execution and still seems plagued by an alphabet soup of names for its ad-related product set. Yet, its cash flow — now a major envy of newspaper companies — gives it time and room to make mistakes and keep coming back.
Its local reemergence was further reinforced this week as MSNBC.com — half-owned by Microsoft — bought a premier local city data company, EveryBlock. (See Insights, Block by Block, EveryBlock Lowers the Bar on Local, March 12, 2008).
That company, funded by the Knight Foundation, offers smart local interactive data that should be a strong core of every local news(paper) site; it drives traffic and screams utility. The fact that MSNBC.com got this prize — and no newspaper company did — speaks volumes.
Outsell believes Advance’s move is an interesting one; an attempt to retain some degree of independence in a world that is becoming more inter-dependent and dependent for newspaper companies. The Yahoo Newspaper Consortium — a good idea for its networking power — has tied newspaper members very closely to Yahoo, and that’s often been (and may be again) worrisome. (See Insights, Yahoo’s Market Moves Show Peril of Partnerships, July 23, 2009). The Advance principle here — test partners, partner strongly, maintain the flexibility to change partners — makes sense in what will continue to be a hyper-changing landscape.