Hilary Schneider and Lem Lloyd of Yahoo, which has formed an alliance with newspapers.By MIGUEL HELFT
Terry Widener has been selling newspaper ads for 35 years. But until last fall, Ms. Widener, a 53-year-old saleswoman at The Knoxville News Sentinel in Knoxville, Tenn., had never sold an Internet ad.
Then in a two-week sales “blitz” intended to test an innovative partnership between newspapers and Yahoo, she persuaded advertisers to buy $200,000 in online ads that ran on the paper’s Web site and on Yahoo. That represented about a seventh of the amount she typically sells in an entire year.
“I’m pretty much from the old school,” Ms. Widener said. “It was such a learning experience. Hopefully I am going to sell more and more online.”
Many newspaper owners and publishers have similar hopes. They say that the partnership with Yahoo is one of the only bright spots in an otherwise horrible advertising market.
Through the partnership, ad salespeople at newspapers pitch local businesses on advertising packages that let them reach visitors to the newspapers’ Web sites and Yahoo users in the area. The newspapers also use Yahoo technology that lets them charge more for ads on their sites.
A similar sales blitz at The Ventura County Star, a small daily north of Los Angeles, netted nearly $1 million in sales in the run-up to Christmas, or roughly 40 percent of what the paper sold in online ads in 2008. The Naples Daily News in Florida did even better: The late-January blitz generated $2 million in sales, or more than half what the paper sold online in 2008. Some larger newspapers have had similar successes.
“If we could do just shy of $1 million in two weeks in a horrible economy, what does it mean for us when the economy turns?” asked George H. Cogswell III, publisher of The Ventura County Star.
Yahoo, which has been struggling with internal turmoil and slowing growth, is also hailing its alliance with the newspaper consortium as one of its most important efforts. The consortium has grown to nearly 800 dailies, up from 176 in 2006.
“It seems to be hitting the sweet spot for both newspapers and Yahoo,” said Lem Lloyd, a Yahoo vice president for the partnership.
No one expects that the partnership will make up for what’s ailing Yahoo or the newspaper industry any time soon. Consider that on Friday E. W. Scripps, the owner of the Knoxville, Ventura and Naples newspapers, closed The Rocky Mountain News, one of its flagship properties. The San Francisco Chronicle, one of the first papers to make use of all parts of the Yahoo alliance, is being threatened with closure by its owner, the Hearst Corporation.
Yahoo’s bet on the newspaper consortium will not give a meaningful lift to its finances this year or tilt the balance in its fight with Google, which dominates the online ad business.
“In 2009, this partnership is not material,” said Hilary Schneider, executive vice president for North America at Yahoo, who is one of the driving forces behind the alliance. “If you look at the long-term opportunity, it is material, and it continues to exceed our expectations.”
The partnership began in 2006 and was initially focused on sharing employment classifieds. But over the last year, about half of the newspapers in the alliance, including some smaller newspapers owned by The New York Times Company, have agreed to begin testing two new elements of the relationship.
One is a new ad system from Yahoo, currently installed at about 100 newspapers, that allows them to sell graphical ads on their sites that are aimed at specific audiences, like car buyers or sports enthusiasts. The system puts users into those groups based on the pages they visit online, a technique known as behavioral targeting.
This allows publishers to sell, say, high-priced travel ads not only on travel pages but also on any page visited by a user interested in travel. An advertiser may have paid 50 cents to reach every thousand visitors to a high school sports page, for example, said Leon Levitt, vice president for digital at Cox Newspapers. “Now it doesn’t matter where the page is on the site,” Mr. Levitt said. “All of a sudden we can sell that page for $15” for every 1,000 visitors who are interested in travel, he said.
The other new element of the partnership allows newspapers to sell ads on Yahoo pages, with the two sides sharing the resulting revenue. That lets newspapers promise advertisers that their messages will reach a larger portion of the local audience, helping the newspapers compete more effectively with television.
Between its print and online editions, The Ventura County Star, for example, reached about 56 percent of its local audience. With the addition of the Yahoo pages, it now reaches 85 percent of Ventura residents, and it can also tell advertisers that they can reach Yahoo’s audience in the larger Los Angeles market.
“It is certainly a new opportunity,” Mr. Cogswell said.
Yahoo benefits too, by being able to tap into some 7,500 sales people at newspapers across the country. The additional ads translate into higher rates for pages that typically command low ad prices, like those on Yahoo’s mail service, Mr. Lloyd said.
Some newspaper executives have been worried that a management shake-up at Yahoo could put the partnership at risk. Ms. Schneider said Carol Bartz, Yahoo’s new chief executive, is squarely behind the alliance. “Carol looks at this partnership as core to Yahoo’s future,” Ms. Schneider said.
Ken Doctor, a newspaper industry analyst with Outsell, said losing Yahoo’s support would be a blow to newspapers. “For the companies that are in it, this is the No. 1 growth initiative in 2009 and 2010,” Mr. Doctor said.
For now, however, that growth provides only a small dose of relief for an ailing industry.
“It’s a new source of revenue that we think is going to be a growing source of revenue,” said William Dean Singleton, the chief executive of the MediaNews Group, which owns 54 dailies and is one of the original members of the consortium. “It is still small compared to the recessionary print declines we are seeing.”
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