Amid Concern Over Yahoo Consortium, New Partner Sees Upside

A recent report cited a Hearst digital sales exec lamenting the competition that his sales team is up against from Yahoo. That, along with other recent news has observers wondering whether Yahoo is really benefitting its newspaper publisher partners. But since the growing newspaper consortium was born in 2006, most reviews of the Yahoo relationships have been glowing, and recently-signed partner Freedom Communications expects the Yahoo brand to enhance its own in the eyes of advertisers.

The Yahoo group continues to expand. Earlier this month, North Jersey Media Group and Freedom Communications each added two paper sites, bringing the roster to 814 members, up from its original 176. Hearst was a founding member of the newspaper consortium.

The deals have brought Yahoo thousands of local ad sales staff for its HotJobs and display ad offerings. In exchange, Yahoo helps the newspaper sites gain better traction in search results, and deploy its national ad sales force to sell inventory from its paper partners. Some publishers also agreed to use Yahoo search on their sites.

Now there is worry that Yahoo is stepping on its local ad partners’ toes. In a June 16 Forbes story, Hearst Newspapers VP of Digital Sales Stephen Weis said the firm’s ad sellers have been competing with Yahoo for some of the same ad clients. A launch last week of Yahoo’s automated display ad tool serving small business advertisers (historically the domain of local media outlets) heightened the concern that the company could potentially harm its partners more than it helps them.

Yahoo’s own Search Marketing Senior Director Patrizio Spagnoletto indicated the company’s new display service could potentially steal away small and local business ad dollars from newspapers. “When you look at other media and see what can be achieved for the money, we think [Yahoo’s My Display Ads] will be very attractive,” he told ClickZ News last week. “When you look at the frequency achievable in the local paper for the money, we think we’re significantly better.” Spagnoletto said the automated ad service will not, at least at first, be offered to its newspaper partners.

Freedom Interactive President Douglas Bennett doesn’t seem too worried about competition from Yahoo. In discussing the firm’s decision to join the consortium, he said he is looking forward to having his sales execs put the Yahoo brand to work when calling on local businesses. “We do think it’s going to be excellent to have that brand associated with our brand,” he said. Freedom publishes California’s Orange County Register and Colorado Springs-based The Gazette.

Before agreeing to work with Yahoo, Bennett said he did “a ton of reference checks,” with other newspaper consortium members. “I think everyone is fairly pleased as it relates to the audience extension and better indexing for search results,” he said.

“Yahoo is trying to take us under their wing. They treat us as if we are almost part of their company,” he said, noting Freedom staff has undergone Yahoo ad sales training in its Sunnyvale, CA, headquarters. “They [Yahoo] don’t want to have to go out and hire hundreds of sales people across the country; they realize that we’re it,” he continued. Freedom plans to start its own internal training on Yahoo’s display ad products in the next couple of weeks. Though Yahoo’s original newspaper partnerships started mainly as HotJobs and Yahoo search distribution deals, Freedom will not run HotJobs ads; the company has a deal with Monster for recruitment ads.

Bennett said Freedom plans eventually to switch to Yahoo’s search platform in place of Google.

The draw for Freedom, as with most of the other paper partners, is additional reach for local advertisers via Yahoo inventory, and the promise of ad revenue from national advertisers buying the local publishers’ inventory through Yahoo. “As you try to build audiences, your actual numbers are at a point where you may not scale at a particular interest category,” said Bennett, who expects the ability to sell behaviorally targeted ads in Yahoo content to help extend Freedom’s site audiences.

Freedom had considered joining with Yahoo in the past, according to Bennett. “This is actually our third attempt,” he said. The first two times it considered joining, Freedom decided against it in part because of what he called “pretty aggressive financial constraints” in Yahoo’s contract that would penalize partners if they had to exit the relationship before the agreement came due for renewal. According to Bennett, Freedom’s financial situation made it difficult in the past to agree to such a contract, but it “had more to do with our own situation,” he continued. “It wasn’t because we didn’t believe in the model.”

Although it’s tough to find much that has disappointed Yahoo’s partners, Bennett did say some partners he’s spoken with think Yahoo’s APT ad management platform could use some improvement when it comes to measurement. “The only thing I hear [from other newspaper partners] is there is a constant need for more information coming out of the ad platform.” But, he continued, “It’s a new platform so it’s evolving.”

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