AT&T to Rep Yahoo Display, Risks for Newspaper Consortium

Yahoo has struck an ad sales partnership with AT&T to represent its local ad inventory on the Apt display ad platform.

The deal adds approximately 5,000 local ad brokers from AT&T Interactive’s local sales affiliate, AT&T Advertising Solutions, who can now sell Yahoo’s local display inventory. That group is comprised of reps who sell listings on AT&T’s YellowPages.com property as well as paid search placements and other local ads.

The arrangement shares similarities with Yahoo’s newspaper consortium, the group of 800 newspapers that partner with Yahoo to sell regionally-targeted display ads on Yahoo properties, and open their own inventory to national advertisers sold through Yahoo. Of those 800 papers, 175 are using Yahoo’s Apt ad platform now.

The deal raises questions about whether newspaper consortium partners might object to the AT&T deal on the grounds it could steal local inventory and advertisers from the newspaper sales teams.

Yahoo’s Jim Schinella, SVP of the North America region, argued it would not have that effect because Yellow Pages and newspaper sellers tend to court different advertisers. He noted Yellow Pages companies focus on services providers such as plumbers, dentists, attorneys, and florists, while newspaper companies focus more on retail and other product-oriented advertisers, and others such as entertainment advertisers.

“The newspapers and directory companies have competed in the same market for many years,” he said. “They do naturally gravitate toward different business partners.”

However there are some ad categories, such as real estate and furniture retailers, that are routinely pursued by both Yellow Pages and newspaper sellers, noted Ken Doctor, an analyst with research firm Outsell. Doctor believes the AT&T partnership will weigh heavily on Yahoo’s newspaper partners.

“Newspaper companies have entered into the agreement believing they were going to be the predominant local sales force, and that they would be able to sell a growing list of Yahoo products,” he said.

At least one newspaper publisher, Hearst, has already expressed frustration that Yahoo is competing with their sales forces for the same clients.

Yahoo is not the first display ad giant to set up a local sales partnership with a Yellow Pages sales force. AOL’s arrangement with IAC’s Citysearch, announced in early 2008, gives it a sizable footprint in regional markets. That deal also included an exchange of content, as AOL integrated user and editorial reviews, videos, and other content on Citysearch.

Unlike that deal, Yahoo’s tie-up with AT&T does not involve the exchange of content or services, although the two already have a partnership. Back in 2006, Yahoo began syndicating YellowPages.com listings on Yahoo Local and Yellow Pages.

“This joint effort is a natural extension of our existing relationship with Yahoo and takes advantage of each company’s assets in the local market,” said Matt Crowley, CMO of AT&T Interactive, in a statement.

News of the deal came as Yahoo announced a 13 percent decline in second quarter revenues. CEO Carol Bartz said that was a positive result in light of the economy. She also said the company will increase its investment in products and marketing for the remainder of the year.