Yahoo and newspapers 18 months after APT

July 23, 2010

YAHOO-MICROSOFT/When Media General reported its quarterly results this week, the company made sure to highlight that its increased digital revenue — up 8 percent — was due in part to its relationship with Yahoo.

“It’s one of the few game-changing partnerships we have had,” Media General digital media president Kirk Read said in an earlier interview.

The publisher of The Tampa Tribune and Richmond Times-Dispatch is part of the 800 or so newspapers that appointed Yahoo to be one of its digital sherpas. The partnership involves ad serving technology, content sharing and, until the sale of Yahoo’s Hot Jobs to Monster, online recruitment. Since the Internet giant launched its ad platform known as APT 18 months ago, the alliance has sold $100 million in Yahoo inventory.

The APT platform allows newspapers to expand their digital footprint within the marketplace by selling online inventory of both Yahoo’s local sites and the newspapers’ web sites. One of benefits of APT is that it allows advertisers to target ads to specific audiences. Newspapers and Yahoo share the revenue for ads sold on Yahoo’s site.

“Things exceeded our expectations,” said Lem Lloyd vice president of channel sales of Yahoo. “The way we think about it is we have built an infrastructure in which to take advantage of a huge local ad share shift that is happening and accelerating over time.”

Gannett, which sat on the sidelines since newspapers formed a consortium with Yahoo in 2006, announced last week that the company will be using APT at its newspapers and television sites beginning in the fall.

“We didn’t see any reason to hurry into the alliance when the technology and business model didn’t exist,” said the president of Gannett’s digital ventures Jack Williams. Gannett is still not part of the formal alliance.

Though many newspapers are pleased with Yahoo, some complaints have surfaced.  And Yahoo has shown some weakness:  the company reported quarterly results that showed some of its customers unexpectedly cut spending on online display ads toward the end of June.

“Overall most folks are glad they did the deal,”  said Michael Silver, executive director of The Newspaper Consortium, which represents the newspapers involved in the Yahoo deal.  But the launch has “been rougher than Yahoo expected,” he added. “These are complicated systems to build and to run. The original design didn’t take into account the complexity a newspaper might have.”

A.H. Belo, which operates The Dallas Morning News, has to enter ad orders twice because Yahoo platform doesn’t integrate with the newspapers’ own systems, said Jim Moroney, executive vice president of A.H. Belo.

While Moroney says the targeting capabilities of Yahoo’s platform is an advantage, he’s concerned about its development. “I feel like in short order when the consortium was announced [up to] today we still don’t have a fix.”

Philly.com, the online arm of The Philadelphia Inquirer and Daily News, ended up leaving the Yahoo consortium. President Ryan Davis said the partnership is an important one for the industry yet when they evaluated their ad-serving needs against the revenue they were generating by selling Yahoo inventory, “it made sense for us to make a switch.” Philly. com is now using Google’s ad serving.

In Yahoo’s defense, Mark Contreras, senior vice president of E.W. Scripps, said there are plenty of opportunities for each side to point fingers. “The reality is now single newspaper company could have brought to bear the audience and technology that Yahoo has been able to bring. We view them as a very wise, very shrewd beneficial long-term partner.”

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