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Summary:

Yahoo and ABC announced a partnership that will see the two combine their news assets. Although it isn’t being described as a merger, it might as well be one — but is it going to work any online magic for either entity? It’s difficult to see how.

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Most of the recent attention aimed at Yahoo has been focused on the upheaval at the former web colossus: the moribund advertising sales, the sudden departure of its CEO Carol Bartz, the rumors of a tie-up with fellow faded web giant AOL. But on Monday, the company tried to get a little positive mojo going with the announcement of a partnership with the broadcast network ABC, which will see Yahoo News and ABC News combine their assets. Although it isn’t being described as a merger, it might as well be one — but is it going to work any online magic for either entity? It’s difficult to see how.

The partnership was announced, fittingly enough, on ABC’s morning show “Good Morning America,” where a news executive described it as a “game changer” for the network. And there’s no question that the merger-that-isn’t-a-merger has some fairly big numbers behind it: Yahoo News is the web’s number one news portal, with about 80 million unique visitors a month — just ahead of CNN, according to a report in the New York Times. The website for ABC News is much smaller, drawing only about 25 million visitors in an average month.

The partnership includes something for either side: ABC, for example, will be producing web shows for Yahoo, including ones that feature personalities like former White House spokesman George Stephanopolous, foreign correspondent Christiane Amanpour and Nightline anchor Bill Weir. And Yahoo will be powering a new Good Morning America website — although ABC will have editorial control — and will also presumably be pushing those 80 million users towards various ABC properties to try and get the network’s ranking up as an online destination.

Is this a game changer? Not even close

But does any of this qualify as a “game changer,” or what Stephanopolous called “the future of news?” Not really. For one thing, as the New York Times story noted, the network has had a partnership with Yahoo that includes video sharing for some time now — since at least 2005. How is this any different? That’s not clear, except for the new Good Morning America website and the three custom shows that ABC has agreed to produce. But is it really a “game changer” that a news network and a large web portal would hook up to try and scratch each other’s backs? No.

John Paton, the new CEO of newspaper chain Media News Group, said on Twitter that such a deal is important because it combines two large properties into one massive news entity, and that this has implications for advertising and “reach,” and he is undoubtedly right about that: the two put together will have an audience of about 100 million, according to the news release announcing the partnership, and that is a sizable batch of eyeballs to serve ads towards.

But is this the “future of news?” Not even close. If anything, in fact, it is the past of news, which explains why anyone reading about this deal could be forgiven for feeling like they’ve been transported back to 2004 (or even further back than that, as noted by Peter Kafka of All Things Digital). This is a “portal” strategy, plain and simple — the same strategy that Yahoo has been pursuing for the past decade or so, which involves amassing huge numbers of eyeballs and then trying to monetize them through banner ads and other ubiquitous forms of advertising. And how is that working out? Not so well, it seems.

More eyeballs won’t solve Yahoo’s problems

Mass-market advertising, particularly online, is a losing battle — consisting of accumulating more and more viewers who are worth less and less all the time. TV audiences may still be relatively valuable (although even that game is changing rapidly) but the explosion of web content means that standard news-related webpages are less than a dime a dozen; in fact, they are close to being a dime a thousand. Do some advertisers still want these large audiences? Sure they do. But they are willing to pay less and less for them, and that is the biggest issue for Yahoo and its fellow former portals like AOL.

Trying to solve Yahoo’s problems by throwing more eyeballs at them is like trying to save a drowning man by pouring him a drink. What advertisers increasingly want is targeted audiences, and they are willing to pay for them. That’s part of the reason why more and more advertisers are working with Facebook and Twitter as an alternative to “mass” media outlets. Is a deal with ABC really going to help Yahoo get more focused on valuable niches or target its content better? It’s hard to see how. Yahoo has been down the “custom online TV show” route before, during the less-than-illustrious tenure of former CEO Terry Semel, and it eventually backed away from that approach because it simply wasn’t worth it.

As former PaidContent founder Rafat Ali put it, these deals keep getting announced every once in a while, and then they sink beneath the waves and no one ever hears from them again — and that’s because they will do little or nothing to change the fortunes of either party in a material way. They are full of sound and fury, but signify nothing.

Post and thumbnail photos courtesy of Flickr users Yodel Anecdotal and Denise Chan

  1. “What advertisers increasingly want is targeted audiences, and they are willing to pay for them.”

    If anybody understands that line, it’s Yahoo. Look up SmartAds and Yahoo Web Analytics.

    Yahoo! Web Analytics, as an example, helps Yahoo’s advertisers measure their web site’s audience in real-time (demo/geo, behavioral interests), can build targeted segments of those audiences, and then export those segments to Yahoo’s Right Media Exchange (the worlds largest ad exchange) for improved buying and selling.

    It’s all about targeting. It’s also why you and I get different Yahoo home page experiences (yours is targeted to what you like and mine is targeted towards what I like). Drives up engagement and click through rates.

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  2. Denise Chan’s photo of the two toy dinosaurs pretty much sums up this deal. :D

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  3. I have seen this announcement a few times on ABC and ABC’s local SF station. Yawn. This is no game changer and we aren’t likely to hear about it in the near future.

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  4. While this may not be a game changer, I think you really don’t understand much about this business… Yahoo does targeting and does it pretty well. Doing good targeting on a population of 100 million is pretty darn good. The vast majority of advertising $ are still spent on old style TV advertising. That’s what yahoo is after… not competing with social media, not competing with search engines. How hard is this to understand? Well of course, if one writes for the sake of getting a few readers excited about the drama, this well explains this type of crap articles. While if one wants to do real information and real analysis, it is VERY easy to know what yahoo is: the premier digital media company… not a social network, not a search engine. As the new generation of <25 years old refuses to waste 100$ per month for cable TV, they turn to the web looking for the same programming for free and with much less invading and more relevant commercials. That's where Yahoo is playing the game.

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  5. Jackie (Cornwell) Kmetz Wednesday, October 5, 2011

    I agree with prior posters that assuming this move is primarily about the portal approach is too limited as there are some significant audience gains for Yahoo with advertisers and ABC with news reach. 25 million is a lot of people. I don’t think it is game changing by any means and as a consumer I don’t feel like I’m going to gain anything from it. This news will become non-news very quickly.

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