Newspaper Yahoo! Ad Platform Launch Will Test “The Yahoo! Bump”
Important Details: Just in time for the fourth quarter, The Media News-owned Mercury News and the Hearst-owned San Francisco Chronicle will soon launch on the long-awaited Yahoo! ad platform, just re-named APT (after its original AMP name was competitively contested). The promise of the new platform is two-fold:
- Newspapers should be able to increase the rates on much of the inventory on their own sites: Behavioral tracking should better identify audiences (Yahoo! is offering 300+ audience categories), which should improve ad effectiveness and clickthroughs, and therefore rates. Early indications are good, with some buys going out at 50%+ and more. Several papers have seen such results, with one big-city paper already having booked almost a million dollars in new revenue.
- Vitally, newspapers will have the ability to sell Yahoo! inventory, which magnifies the amount of inventory they can sell. The amount of increased inventory varies market by market, but ranges from 2 to 4 times the amount of inventory newspapers have available on their own sites. Newspaper salespeople will sell the advertising, and newspapers will pay Yahoo! a 50% share of the revenue.
The Yahoo! APT launch follows on the building of the consortium, first announced in April 2007. The consortium, which involves more than 700 US dailies, about 40% of daily circulation in the nation, has focused on four areas: 1) increasing traffic to newspaper sites, through better Yahoo! links; 2) implementation of Yahoo! search and paid search throughout the properties; 3) a tight and lucrative partnership in the recruitment vertical, around Yahoo! Hot Jobs, and now 4) more robust display advertising targeting and sales.
The biggest barrier to harnessing the significant potential of APT has been sales. While the newspaper consortium members have just under 10,000 local salespeople — a huge number that is thee envy of Yahoo! – many of them have the order-taking habits of seldom-challenged sales people. The new world demands consultative, flexible, audience-targeting skills. Consequently, Yahoo! has provided a great deal of sales manager training at its Sunnyvale headquarters and the newspapers themselves have tried to drill such training down through the ranks.
Launches of APT begin in earnest in the fourth quarter and will run through the end of 2009.
Implications: Outsell believes that the APT platform represents an acid test for newspaper companies. With online revenue growth flagging into negative numbers for many companies, the forward-reaching, audience-intensive ad system is just what newspaper companies need to foster real, sustainable growth. We should see a genuine Yahoo! Bump, though given increasing opacity in reporting by some public companies, it may be hard to see how big the bump really is. Outsell believes that the initiative is important in and of itself, and as a pointer for the kind of futures these companies need.
We’ve said it before. The future of local news companies, print or broadcast, is in two areas: content creation and sales development. The internet changes much of the rest of the business, production and distribution in particular. APT points to a way to better exploit a unique differentiator: large, feet-on-the-street salesforces. As news companies test out APT, they should look at applying the same principle — having their own salespeople sell inventory across the web on other companies’ websites. Partnership potential ranges beyond Zillow, a recent partnership, to Google, MSN, AOL, Facebook, MySpace, News Corp, ESPN and many other high-traffic niche sites.
In the enthusiasm for the launch, one point shouldn’t be missed. The Yahoo! Bump won’t make up for lost print revenues. It’s a nice pipedream to believe that one supercharged digital line going up will magically erase the pain and lost revenue of the limp print line going down. The numbers, though, just don’t support it. The industry overall is still dependent on print for 92% of its revenues in the US, having failed to make a sufficient digital transformation, and we’ve seen the resulting downturn in revenues: 2.4% by NAA’s own reckoning in the first half of 2008, or or about $3 billion for the first six months alone. The Yahoo! Bump should be worth, well, tens of millions, properly executed. But that’s millions against billions. Those are important millions, though, the building blocks of the new digital businesses.