Newspaper Firms Join With Yahoo in Advertising Partnership

By Yuki Noguchi
Washington Post Staff Writer
Tuesday, November 21, 2006

Years of rivalry between newspapers and the Internet portals that are siphoning their local advertising dollars gave way to a new partnership yesterday, as seven newspaper companies announced a wide-ranging deal with Yahoo.

The media companies, which collectively own 176 daily newspapers, will use Yahoo's technology to sell ads for their Web sites and list their employment classifieds on Yahoo's HotJobs site -- giving the local papers broader reach online as they try to shore up their business.

The deal comes during turmoil in the newspaper industry as steadily declining circulation levels have prompted layoffs, management shifts, the sale of large chains such as Knight-Ridder and the possible sale of Tribune Co.

For years, newspapers responded to the steady march of their classified listings to the Internet by banding together and investing jointly in sites such as CareerBuilder.com and Classified Ventures, which provide Web-based complements to their print ads and are designed to help them compete against Yahoo and Google. But as the pace of change picks up, some papers are shifting their approach away from developing their own systems for online advertising and instead are turning to new-media firms.

William Dean Singleton, chief executive of one of the participants, MediaNews Group, acknowledged that partnering, rather than competing, might be the smarter route.

"Going it alone will just take too long," said Singleton, whose company owns papers including the San Jose Mercury News and the St. Paul Pioneer Press. "This is a transformational deal for the newspaper industry."

Peter M. Zollman, principal of Classified Intelligence, an advertising consultancy in Florida, said the deal could be "very powerful" for both Yahoo and newspapers, which are struggling to find audiences.

"The newspapers have fundamentally put aside their distrust of working with a dot-com," Zollman said.

The other members of the newspaper group are Belo, Cox Newspapers, Hearst Newspapers, Journal Register, Lee and E.W. Scripps. The companies represent major dailies such as the San Francisco Chronicle, the Dallas Morning News, the Atlanta Journal-Constitution, the Denver Post and the St. Louis Post-Dispatch.

For Yahoo, the partnership is a way to compete more aggressively with Google for Internet ad dollars.

"Yahoo sees this as another big step toward creating the most comprehensive advertising network in the online industry," said Susan Decker, chief financial officer for Yahoo.

The first phase calls for integrating newspaper classifieds with Yahoo's HotJobs early next year and giving HotJobs -- the Internet's third-largest recruitment site -- a presence on each local newspaper site. Later, Yahoo also plans to integrate other services with the newspaper sites, including its search engine, mapping features and event listings. Yahoo hopes the deal will enhance its local content and advertising reach with local businesses through the newspapers' existing ad sales forces.

One goal is to make selling ads easier for both Yahoo and newspapers. For example, a hospital could reach job seekers outside its local newspaper's circulation area by placing an ad in a paper partnered with Yahoo. Yahoo hopes to sell targeted ads more easily for display in health sections of newspapers and ads paired with health-related search queries.

Google recently announced a trial of a different sort with several dozen large newspapers, including The Washington Post, in which Google will use its technology to sell print ads. Yahoo's deal yesterday did not include a similar arrangement with newspapers but could be open to that in the future, executives said. Yahoo is also looking to add more newspaper partners, they said.

Zollman said Yahoo's deal with newspapers could, in time, threaten existing newspaper partnerships such as CareerBuilder.com, jointly owned by Tribune, Gannett and McClatchy, and Classified Ventures, owned by Tribune, McClatchy, Gannett, Belo and The Washington Post Co.

Investors apparently reacted with concern: Shares in the parent company of the second-largest job site, Monster.com, fell 4.1 percent yesterday, to close at $44.79.

A spokeswoman for CareerBuilder.com, the most trafficked job site, declined to discuss the Yahoo deal but said in an e-mail that the company "expects to maintain our leadership nationwide."

Some analysts said the deal won't help the newspaper industry change the underlying dynamics of its eroding base, even though Yahoo and similar sites have the coveted younger audience that newspapers have not been able to get to subscribe to the paper.

"It just forestalls the inevitable," said Allen Weiner, an analyst with Gartner Group.


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