Suddenly Newspapers Are Sexy

Less than a month after Google announced what it called an “alpha” test with 50 newspapers, Yahoo! has launched something more ambitious and extensive — a major partnership with seven newspaper groups that publish 176 local print editions. Those publisher groups are:

• Belo Corp.
• Cox Newspapers Inc.
• Hearst Newspapers
• Journal Register Company
• Lee Enterprises, Incorporated
• MediaNews Group
• The E.W. Scripps Company

The partnership began as a way to bolster the fortunes of Yahoo!’s third-place HotJobs in a competitive online vertical and was first reported by BusinessWeek’s Jon Fine. And the new relationships will reportedly make now make HotJobs the “largest local and national jobs network,” surpassing newspaper-owned CareerBuilder the current number one site.

But jobs are the least interesting part of this deal. This has obviously evolved from original, narrower discussions into something much more interesting with much farther reaching implications for all the parties involved. This is both about technology but more interestingly it’s about creating a broad, national-local ad network and a consortium that has a powerful combination of online and offline assets.

The consortium will have a local presence in 38 states and 51 of the top hundred DMAs. The combined traffic of Yahoo! and the online sites of its newspaper partners will approach 190 million uniques. (There’s some obvious overlap there – comScore says the entire US Internet audience is 172 million.)

Newspapers have been struggling (and experimenting) with various online strategies but haven’t been able to tell the market a compelling story about the future. That’s why Knight Ridder was forced to be sold and that’s why Tribune Co. is on the block now. With this deal, the involved newspapers can now tell a potentially compelling story.

From the press release:

In another step towards creating the most comprehensive advertising network in the online industry, Yahoo! Inc. today announced a strategic partnership with more than 150 daily U.S. newspapers to deliver search, graphical and classified advertising to consumers in the communities where they live and work. Beginning with recruitment advertising, the newspapers and Yahoo! HotJobs are bringing one of the largest online audiences, targeting capabilities, local expertise and advertising power to recruiters. In addition, the consortium plans to work together to provide search, content, and local applications across the newspapers’ Web sites.

From this morning’s NY Times’ story:

During the next year, the partnership will be extended as newspapers begin displaying their news articles and local ads on Yahoo’s online network

Yahoo, in turn, will make available local event listings, maps, search technology and other content and tools on the newspapers’ Web sites. Yahoo will also use its technology to help newspaper sell online ads.

In short, newspapers get access to technology, traffic and advertising — all things they need. The partnership gives Yahoo! relationships, content and potential distribution it doesn’t have locally — and local sales channel partners.

Newspapers have been historically successful getting a huge share of budget from certain categories of advertisers (e.g., retailers). Yet they’re not getting that money online (it’s going to Yahoo!, MSN and others). For example, for the first six months, Federated (Macy’s) Dept. Stores spent almost 75% of its ad budget with local print newspapers and Sears spent about 69% with print newspapers. By contrast, in the top 20 sites where both of those retailers spent money online there was only online one newspaper site in each case.

This deal could help rectify some of those imbalances. Indeed, if well executed, this could be a success all around. I could speculate about what might concretely come of this but that’s a long digression in an already long post.

Let’s just say this is good news for the involved newspapers and for Yahoo!, which has needed some after a run of negative PR of late.

The NY Times article somewhat ironically ends with a quote from Hilary Schneider, previously with the former newspaper publisher Knight Ridder, now “marketplaces” SVP for Yahoo!: “There is significant opportunity to materially grow local advertising.”

She’s right and all sides hope this deal will do just that.

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Here’s today’s WSJ (sub req’d) article on the deal.