Monday, July 19, 2010

Gannett and Yahoo! ink local advertising partnership: local sales teams will sell web giant's inventory to local clients

Late last week Gannett and Yahoo! announced a new joint venture where the newspaper and broadcast giant would begin selling advertising inventory on the Yahoo! website to Gannett's local clients. The press release where the idea was generated but it is a fairly old concept that is finally getting a tryout.

Gannett's 81 local publications, and its seven broadcast properties, will be involved in the scheme that will allow local Gannett reps to sell onto the national Yahoo! website with ads targeted presumably to local web readers based on their IP address and user demographics.
"Local advertising continues to be an important area of focus for us, and Yahoo! is committed to helping local businesses reach high quality target audiences," said Hilary Schneider, executive vice president, Yahoo! Americas in the press release. "This partnership significantly expands our local offering and gives advertisers the technology and scale they need to reach online consumers."

For Gannett, this is no doubt a tacit admission that its own web strategies are failing to generate sufficient local revenue. Its local sales teams will now be able to offer greater reach by including Yahoo! in any Internet ad package -- the unsaid problem being that many print teams continue to prefer to sell higher priced print instead of low cost we. This will not solve the other major issue confronting newspaper sales teams: poorly trained web sales teams.

The new sales effort will be rolled out over the the next year and presumably some of the training issues (as well as pricing issues) will be worked out over time.

This story is like Groundhog Day for me. In the early nineties I was recruited to a start-up in Chicago that wanted to sell this concept to newspapers across the country. The idea was simple: I would talk to newspaper companies about the idea of selling major web properties to their local customers. A local newspaper could offer sites like Yahoo! or CNN to local merchants, who would then have their ads streamed to locals readers whenever they clicked on the national sites. Our company would use IP address technology to make sure the right ads reached the web browsers.

The most concept was that national web properties like Yahoo! and CNN were still having trouble selling out ad inventory and that these properties would be more than happy to sell us the leftover inventory, and we in turn would offer the inventory to the local papers.

There were two major problems with the concept -- one could be overcome, the other could not.

The first problem was convincing the local papers that they could sell ads onto major web sites and make money at it. But I found that as a former newspaper sales person, manager and publisher myself it was not impossible to show that budgets could be met and profits made in selling highly desirable web advertising to local merchants. While the local newspaper teams were finding it difficult to sell their own websites, the thought that they could offer a site like CNN to a local merchant got them interested. As long as our company provided sales materials and some minimal training, the newspapers were interested.

The second problem killed the company. While I was out there talking to newspapers about the concept and getting them interested I would always hear one concern: "we really can sell the Yahoo! site? Really?" I would then return to ask the president of the start-up whether he really had locked in these national websites. Finally after asking the same question over and over I demanded confirmation: you really have gotten a commitment from these sites, right? The answer ended up being that he wanted the newspapers on board first, then he would approach the websites. In other words, I was wasting my time talking to newspapers since there really was no inventory to sell. And that was that.

Now, seven or eight years on, we have this agreement between Gannett and Yahoo! Will it work? Maybe. But far too many publications have been more and more cost conscious and less and less sales driven. As a result sales teams have shrunk, training cut back. Quotes still need to be made, so sales people go for the higher priced print sales.

But the biggest problem most newspapers face is that they have 20th Century sales structures: they still have retail and classified teams structured the same way they were 20 years ago -- some have simply added a web layer on top of the print layer. Classified departments, which once produced a huge portion of the revenue generated locally have often not evolved into nimble electronic sales departments -- and often because the retail sides have feared encroachment of classified the same way they feared the inside classified teams selling cheap ads to retail customers in the past.

As a result, classified teams have been downsized as the classified ads went online, and the result has been a cycle of lower sales, cutbacks, lower sales, more cut backs.

Can other newspapers duplicate Gannett's move? Yes, in a way. Newspapers should have become website building machines years ago. With the web capabilities that exist at a newspaper, publishers should have been launching sites at a feverish pace, instead of putting all the eggs in one basket -- their main newspaper websites. By creating local and speciality sites, publishers could be not only repurposing newspaper content but also attracting lots of read sales ers who do subscribe to their print products. The amount unused copy that is at the disposal of a newspaper is enormous compared to that available to magazine publishers.

The failure to create local news sites has given rise to new online competitors, both for readers and advertising. These sites believe -- rightly -- that many newspapers have abandoned local coverage of high school sports, clubs, local government. Papers haven't made a decision to cutback this kind of coverage so much as made tough choices with their print editions. Online, many newspapers have actually expanded their local and specialty news holes -- some have brought in aggregation vendors such as Outside.In in order to create new pages of local news.

But the content usually ends up buried inside the main website, making it harder to sell the ad inventory. Additionally, the same teams responsible for selling huge quotes is brought to bare in selling these local news pages. No wonder then that aggregation firms are discovering that newspapers don't make very good ad sales partners, so they end up creating their own teams.

Is it easier to sell a site like Yahoo! or a new specialty site. I believe it is. For one thing, major national sites obviously have cache with those in Internet advertising. But the specialty sites have the same high value, but for a different reason. A new high school sports site may not have name recognition, but it has local credibility -- anyone with a kid in school knows how suddenly anything story that mentions your kid, your football team, your school is of interest.

Traffic numbers for new local or specialty sites are low, of course. But local numbers for Yahoo! won't be high popping either. The key is targeted advertising that gets the local client excited. That is how you sell Internet advertising to local newspaper customers.