• by Erik Sass  @eriksass1, August 14, 2008

Centro has acquired RealCities' assets from McClatchy, the online display ad service announced today. The move will increase the scale of its offerings and make buying local online media easier for advertisers with a single point of sale.

Centro would not disclose the terms of the deal, which will integrate RealCities' client relationships and advertising contracts into Centro's business, rebranding these elements as Centro properties.

However, Centro is not acquiring RealCities' publisher representation contracts, since the company's intention is to remain an essentially neutral platform connecting local online publishers with advertisers, according to founder and CEO Shawn Riegsecker, who draws a distinction between Centro and online ad networks.

Riegsecker said Centro's software platform allows national and local advertisers to run display ads with flexible distribution, ranging from a single newspaper's site to all the sites in a state or region to a run-of-network buy covering all 8,000 publishers.

In its early days, the company focused on aggregating local news sites--predominantly newspaper Web sites--but has since grown to include most national sites as well.

The software platform allows buyers and sellers of ad inventory to collaborate in an automated "soup-to-nuts" workflow management system, Riegsecker explained, "including everything from site selection to building the media plan, contract negotiation, verification and billing." Versions of the software are being tested by various media-planning agencies.

Display advertising has become the most important source of online revenue growth for newspapers large and small, displacing online classifieds, which powered double-digit growth for several years before collapsing in 2007-2008. Revenue from online classifieds surged, then sputtered, because most online listings are sold as "upsells" from the print product. As print classifieds go the way of the dodo, there are fewer opportunities for online upsells.

By contrast, online display advertising is growing in the high double digits, according to Riegsecker, who said revenues were growing at a year-over-year pace of roughly 80% to 90%. Although most companies still don't release separate figures for "Internet-only" revenues, McClatchy CEO Gary Pruitt, discussing second-quarter results, remarked: "Excluding employment advertising, which is the category most tied to print upsell advertising and which has declined nationally both in print and online, our online advertising grew 58.5% in the second quarter of this year."

Meanwhile, online display ad revenue is up 26% at E.W. Scripps, and local ads (mostly display) rose 45.7% at Media General. Finally, although she did not cite specific figures, NYTCO CEO Janet L. Robinson attributed the 13% increase in the company's online revenues to "strong display advertising."

McClatchy said Wednesday that revenue from Classified Ventures, which it co-owns with Belo, Gannett, Tribune, and the Washington Post Company, was down 13% since December.