Newspapers Create Another Ad Network

This has been in the works for a long time: Gannett Co., Hearst Corp., the New York Times Co. and Tribune Co. have formed a joint venture called quadrantOne. The intention is to allow national advertisers to buy local online placements in a central and more efficient way than they otherwise could. The flagship papers of the NY Times and Gannett (USAToday) are not included because they’re not considered local. In all there will be 120 papers, with a combined reach of 50 million users in 27 of the top 30 markets.

All this would put the network above Business.com but below roughly 34 other online ad networks in terms of reach:

comScore ad network reach 8/07

The differentiators, presumably, would be access to premium inventory, traffic quality and transparent local targeting. The problem for quadrantOne is that Centro has 25% more reach at around 80 million and already provides a single point of entry for national advertisers and their agencies. Then there’s the McClatchy owned Real Cities, which has been around for a decade and which offers the same value proposition and the Newspaper National Network, which all four quadrantOne partners partly own. This is a shot over the bow of Real Cities, which will die if quadrantOne succeeds.

Stepping back, most of the big ad networks offer “geotargeting.” The problem there is that much of it is blind and therefore not appealing to brands. AdSense is an example. But so is Advertising.com and ValueClick, Tribal Fusion and so on. There are also other local online ad networks, though few of them (save Real Cities) have any reach:

  • Real Cities (claims 1600 affiliates and 40 million uniques)
  • MediaSpan (local radio, newspaper and television websites; claims 1,000 sites with 6 million uniques)
  • WorldNow (network consists of local TV affiliates; claims 320 media partners, traffic uncertain)
  • Internet Broadcasting (70 local sites [mostly TV]; claims 16 million uniques)

Centro buys from all these providers for its advertisers and claims that it controls roughly half of locally targeted display advertising online. Accordingly it has reach beyond any of the newspaper networks and offers better “quality” than the blind networks. The problem is that the newspapers don’t own Centro (and this move may be an effort to “go direct” and thus marginalize or diminish Centro’s power).

Indeed, ownership and control are at the heart of this effort to build yet another newspaper network. That’s why newspapers are ambivalent about Yahoo! as well as other third parties they work with. Accordingly one could see this move as another hedge against the Yahoo!-dominated newspaper consortium, which includes Hearst, and now looks as though it won’t achieve its lofty objectives given Yahoo!’s troubles.

In recent months newspaper publishers have “diversified” or backed away from an exclusive tie-up with Yahoo! by doing a comparable deal with Zillow for real estate advertising and syndication.

In research that I performed in early 2007, I discovered that the top 10 newspaper display advertisers where not buying comparable advertising online from newspaper sites. The well-known problem was fragmentation, making it hard for national advertisers to get the reach that they needed or deal with a single point of contact. Real Cities and NNN have sought to overcome that sort of fragmentation, although neither operates on a common technology platform. And Centro simplifies buying already.

All these competing newspaper networks cannot co-exist and there will undoubtedly be a shakeout of sorts. But what’s arguably needed is a larger combination for local online ad buying that reaches not just newspapers but a broad range of local sites, but with the transparency offered by a Centro or Quigo (now part of AOL).

One could argue it might have been better and more efficient for the four owners to simply have bought Centro than to recreate the wheel in a manner of speaking.

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Here’s more from the NY Times and the WSJ.

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5 Responses to “Newspapers Create Another Ad Network”

  1. Latticework Linkfest – 2/15/2008 Says:

    [...] York Times (NYT) to cut 100 jobs while media firms team up to create new ad network: Can old media build a competitive moat around local ad [...]

  2. Arul Sundaram Says:

    Greg – great post. I agree that QuadrantOne (as well as IB – who I work for) needs to clarify what their position is in the marketplace. Your points regarding scale / ease of buying are critical to understand: even though networks and portals are offering what amounts to “blind” geo-targeted inventory, if they can deliver reach, volume and value (low CPM), they create a significant competitor for local media. And with Centro doing such a good job helping agencies place local dollars on branded sites, the role of pure local networks is definitely challenged.

    Regarding your points on control and the Y! / newspaper consortium – while the press releases have made the relationship out to be a broad-sweeping one, it does seem to have focused to date on HotJobs. As such, it’s not clear that the newspapers are really interested in giving up all forms of monetization to any single party – and I think your highlighting of the Zillow partnership is an excellent example of that. That said, it does seem like newspapers (and all traditional local media properties) will need to figure out their place in the world – doing deals with Zillow, HotJobs, etc. feels a lot like what the portals were doing a few years ago…and look where that’s gotten them. Newspapers will need to control a central form of user engagement (likely their newsrooms – but will that scale?) and monetization (unclear what this will be) to be able to thrive online in the coming years.

  3. Greg Sterling Says:

    Thanks for the thoughtful remarks. Glad you liked it.

  4. Vertical Zoom - Traditional Publishers Announce B2B Ad Network « AdViking Says:

    [...] quadrantONE, the ad network created by  newspaper co’s:  Gannett Co., Hearst Corp., the New [...]

  5. Zillow Launches Ad Network « Screenwerk Says:

    [...] is now flush with ad networks. In addition to Zillow, there are: Centro (not a network exactly), quadrantOne, the Yahoo! newspaper consortium, Google Print (only for print) and all the legacy newspaper [...]

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