Yahoo, Newspapers Form Major Alliance
- by Mark Walsh @markfwal, November 21, 2006
The first phase of the deal will allow the newspapers' help wanted advertisers to post classifieds on Yahoo HotJobs, while the newspapers' online career sections will be powered by HotJobs. The job sites will be co-branded between Yahoo and local newspapers in 38 states including The San Francisco Chronicle, The Dallas Morning News, and The Atlanta Journal-Constitution.
Over the long term, the partnership is expected to extend to other types of advertising and content-sharing such as incorporating Yahoo search and mapping into newspapers' sites and distributing newspaper content through Yahoo search, news, and other sections of the portal.
"I think that now is a magic moment for everybody--that Yahoo needs and wants this distribution, and newspapers recognize that they need a powerful partner to help them have a competitive online offering," said Greg Sterling, principal at Sterling Market Intelligence.
For Yahoo, the deal provides a much-needed boost amid slowing ad revenue sales and widespread criticism that the company has missed out on key strategic opportunities to competitors such as Google and Fox Interactive Media. In a recent memo, which surfaced in the press this weekend, Senior Vice President Brad Garlinghouse called for a complete overhaul of the company, arguing that Yahoo should exit "non core businesses," revamp its management structure, and shed as much as 20% of the workforce.
Earlier this month, Google unveiled plans to sell print ads in 50 major newspapers, including publications owned by Gannett, The Tribune Company, and The New York Times Co.
For newspapers, the Yahoo alliance provides the framework for a comprehensive strategy for tackling the Web after years of losing ad market share to the Internet portals and free listings sites such as Craigslist.
In a conference call Monday, including executives from Yahoo and participating newspaper companies, William Dean Singleton, CEO of MediaNews Group, called the alliance a "transformational deal for the newspaper industry"--and one that would enable them to expand their assets to a much wider audience.
In addition to MediaNews, other companies involved in the newspaper group include Belo Corp., Cox Newspapers, Hearst Newspapers, Journal Register Company, Lee Enterprises, and the E.W. Scripps Company. Singleton said he expects other newspapers to join the initial group, which has a combined daily circulation of 12 million and Web sites that draw a total of 58 million monthly visitors.
Newspaper executives plan to begin selling jobs ads onto HotJobs immediately and to adopt HotJobs for their career sites during the first quarter of 2007 before going on to roll out other aspects of their agreement with Yahoo, such as search advertising and content distribution.
The HotJobs agreement, which grew out of an existing partnership of Yahoo with Belo and MediaNews, would likely help HotJobs better compete with Monster and CareerBuilder, which have dominated online employment listings. "It will turn essentially a two-way horse race in online recruitment into a more competitive three-way race," according to a research note on the alliance issued Monday by Merrill Lynch analysts Justin Post and Lauren Rich Fine.
As part of today's announcement, newspaper executives presented research showing that the deal would vault HotJobs into leading positions for online job listings in major markets including Atlanta, Houston, San Francisco and St. Louis. The combination of HotJobs and local newspaper listings in Atlanta, for instance, would produce a market share of 48%, compared to 32% for Monster and 24% for CareerBuilder, according to data compiled by market researcher Corzen Inc.
Monster is already chipping away at the approximately 130 newspaper help wanted sites powered by CareerBuilder, including that of the Akron Beacon Journal and the Philadelphia Inquirer and Philadelphia Daily News.
When existing contracts expire, CareerBuilder is expected to lose more newspaper partners to the new HotJobs/newspaper alliance.
While neither Yahoo nor newspaper executives disclosed financial aspects of the deal, they said it would include revenue-sharing as newspapers extended their listings on Yahoo advertising platforms and Yahoo incorporated the newspapers' content into its Web properties. "We, to a large extent, become the local sales force and Yahoo is the national, and broader, sales force for online," said Singleton. There are no plans yet, however, for Yahoo to sell ads in the print versions of any newspapers.
In terms of picking an online partner, "the choice of Yahoo was pretty simple," said Singleton. Besides being the Internet's most heavily trafficked site, Yahoo offers a range of content and ad platforms while sites such as Monster and CareerBuilder are limited to selling help wanted ads, he noted.
Although acknowledging the mutual benefits of the deal, newspaper industry observers cautioned against excessive optimism. "I'm highly skeptical from the past of these things being announced and nothing ever happening," said William Borrell, president of research firm Borrell Associates, which focuses on local media. He and other experts cite the collapse of previous newspaper initiatives such as the New Century Network, formed by companies including Cox, Gannett and Knight Ridder in 1995 to boost online expansion efforts.
Peter Zollman, founding principal of Classified Intelligence, shared Borrell's skepticism--but noted that the online landscape had changed dramatically in the last decade. "The New Century Network was a different lifetime when it comes to Web advertising and the Web in general," said Zollman, noting that there were far fewer Web users and Yahoo was just starting as a company.
The test will come in how well the parties execute their grand alliance. "As with all these things, the proof is in what actually happens," said Sterling.
