2 Comments

Summary:

A little over a year after Gannett (NYSE: GCI) and Yahoo (NSDQ: YHOO) teamed up on local ads sales primarily for the publisher’s 81 communit…

Yahoo Local

A little over a year after Gannett (NYSE: GCI) and Yahoo (NSDQ: YHOO) teamed up on local ads sales primarily for the publisher’s 81 community newspapers, the two are extending their partnership to include all of Gannett’s 19 local TV stations. The effort is part of Gannett’s greater focus on web-based local marketing, while Yahoo, having represented nearly all the major local newspapers through its existing ad alliance, is increasingly turning to broadcasters as it tries to find deeper ways of tapping small business-related online ad spending.

For years, small- and medium-sized businesses represented a largely untapped segment of online advertisers. Most businesses lacked the interest and the relative sophistication that tends to inspire internet ad sales. But that has been changing lately and Gannett and Yahoo have been working diligently to extract those nascent ad spending.

SMBs, as these marketers are known, will continue the recent trend of shifting their marketing budgets to digital advertising, performance-based platforms and customer relationship efforts over the next five years, according to a forecast by BIA/Kelsey. By 2015, these local auto dealers, pharmacies, pizza parlors and the like will devote only 30 percent of their marketing budgets to traditional advertising (down from 52 percent in 2010), with the remaining 70 percent going to digital/online media (mobile, social, online directories, online display, digital outdoor), performance-based commerce (pay-per-click, deals, couponing) and customer retention business solutions (email, reputation and presence management, websites, social marketing, calendaring/appointment-setting).

For the past two years, Gannett and Yahoo have looked for ways to capitalize on that shift. By expanding the partnership from Gannett’s 81 U.S. Community newspapers (and nine local TV stations) to its 10 remaining broadcast outlets between September and February, Yahoo hopes to attract new kinds of advertisers than the ones it gets through the 800-member Yahoo Newspaper Consortium. Over the past year, Yahoo has also added 100 TV station websites sales deals to its local ad alliance, through partnerships like Belo, Cox and Scripps, which like Gannett, began as newspaper partners.

In general, local TV stations have been less than aggressive in ramping up internet ad sales, at least in comparison to their newsprint counterparts. But when the recession hit three years ago, TV stations felt that they couldn’t ignore the incremental revenue of the web any longer. Plus, as broadband penetration to smaller locales increased, TV station websites began looking at their websites as providing a nice complement to their primary offline sales.

For the past three years, public newspaper companies have routinely praised the Yahoo Newspaper Consortium for helping boost quarterly digital revenues. In July, Gannett CEO Craig Dubow gave Yahoo partial credit for driving its digital broadcast dollars higher by 30 percent in Q2.

“We saw a lot of client renewals related to the Yahoo ad sales partnership, so we decided it made sense to add all our stations to that program,” said Anthony Diaz, Gannett’s VP for sales strategy and development, said in an interview with paidContent. “We know how to connect with advertisers in our markets, and Yahoo allows us to put their ads in front of the right audience by targeting those users at the right time.”

For Yahoo, those ad relationships are particularly valuable. Where AOL’s local strategy is predicated largely on adding new Patch locations, it can take a while for ad sales teams to strike extensive deals with local and regional marketers. Yahoo is simply relying on sales teams that already have an established presence. “TV is going for a different set of advertiser than newspapers do,” said Lem Lloyd, Yahoo’s VP of Channel Sales/Small Business. For example, TV does really well with tier-two automotive dealers, a segment that’s tough to crack. We’re also seeing health care and education spending growing.”

Building out the alliance between Gannett and Yahoo come as both face challenge. Gannett already told investors to expect broadcast revenues in general to be down in the “mid-single digits” due to the absence of political ad spending in Q3, compared with 2010’s hotly contested Congressional and gubernatorial races. Yahoo, meanwhile, has been battling disappointing results in display due to the restructuring of its own sales team. While the addition of less than a dozen TV station sites aren’t going to make that big a difference in Q4, but over time, as the BIA/Kelsey research suggests, as more small businesses become more acclimated to online advertising, Gannett and Yahoo will have a head start, especially as their ramp up their individual ad efforts aimed at the local level.

Comments have been disabled for this post