Open your windows, and you can almost hear a muted "Yahoo!," wafting out of the windows of many newspaper buildings across the land this week. "Yahoo!," as in the long-awaited launch of the ready-for-newspaper-integration ad platform has begun. Though I have doubts that this is the cavalry coming finally to save the beleaguered newspaper industry, it clearly should mean some long-needed supplies -- in the form of advanced targeting technology -- are on the way. Kind of like replacing balky cannons with laser-sighted rifles.
Now renamed APT, after responding to Collective Media's contest of the AMP name, and introduced by Mad Man honcho Don Draper, or actually actor Jon Hamm in his civilian guise (great "Fresh Air" interview of Hamm and on the Mad Men ad show phenomenon, here), the new platform is launching at two pilot properties. The Media News-owned Mercury News and the Hearst-owned San Francisco Chronicle go up first. Then other properties in those two chains join in. Wave 2's in 4Q of this year. Then, Wave 3 in 1Q and the waves keep rolling out into the deep end of 2009. Properties are added roughly in the order that their companies joined the Yahoo Newspaper Consortium.
Two big points about APT's launch stand out:
- Now it is time to track and report the The Yahoo Bump. If you talk to company CEOs, or listen in on their (increasingly) occasional conference calls with financial analysts, you hear "Yahoo", "Yahoo", "Yahoo", coming up repeatedly in response to the questions of where growth is going to come from. Admittedly, most companies don't have many bright spots to report, so the First Coming of the Yahoo Ad Platform has been handy.
But now, the question: how big a bump will Yahoo provide? Overall online revenue increase will be one indication of the Yahoo Bump. Even better, it will be good to have more companies break out their online-only ad revenue, publicly, something few companies do. McClatchy recently said it had almost reached the 50% point, at which online-only revenue will surpass bundled (with print classified, largely) revenue. The New York Times also tells me that for NYTimes.com (not the company overall), online-only is a majority of digital revenue. Few other companies, public or private, have given an indication of those numbers. The reason they are important: Crossing over the magic 50% line is essential to creating a booming online business going forward, as challenged bundled advertising inevitably is dragged down by the vicissitudes of the print business.
2. The Yahoo Bump won't make up for lost print revenues. It's a nice pipedream to believe that one supercharged digital line going up will magically erase the pain and lost revenue of the limp print line going down. The numbers, though, just don't support it. The industry overall is still dependent on print for 92% of its revenues in the US, having failed to make a sufficient digital transformation. So as we've seen the turndown in revenues -- 2.4% by NAA's own reckoning in the first half of 2008 -- we see literally billions going out the door. That's about $3 billion for the first six months. The Yahoo Bump should be worth, well, tens of millions, properly executed. But that's millions against billions.Those are important millions, though, the building blocks of the new digital businesses
Beyond those two big points, here's what we know -- and will track -- about APT and the newspaper industry:
- Early experience with Yahoo's BT system, done manually pre-platform, has been good. Houston (Hearst), Milwaukee (Journal Sentinel) and Atlanta (Cox) have all gone to town with it. They're selling audience, better targeting of it (300+ audience types will be targetable through the new system) and making some money. One has reached the million dollar mark already.
- The spoils go to the trained. Public focus on APT has focused on the technology. Its BT base is the essential sauce. It is the massive sales re-training of sales managers and salesforces, though, that will separate the big winners from the also-rans, as APT rolls out. Training has never been a strong point of newspaper companies, so the Yahoo-related sales training -- conducted in Sunnyvale and newspaper HQs around the country -- probably constitutes the most major massive sales training the industry has ever seen. Some companies have hired up, moved out salespeople who can't cut it and got their long-time print reps (with long-standing local sales relationships) up to speed. Others face the persistent cultural problems of changing habits and sales pitches.The first step is the training; the next is acting when some results are below expectations.
- That sales training is a boon to newspapers -- and Yahoo. By one calculation, when APT is fully deployed, almost 10,000 newspaper-related sales people across the country, selling off it. That's a lot of feet on the street. For Yahoo, it's a way to get a huge sales staff, without having to pay it or manage it directly. While technology's great and self-service is a major innovation, feet on the street are an essential third leg on the modern ad stool. Those sales people will be out selling local Yahoo inventory -- Yahoo users identified as local (whether in News, Local, Finance, Sports, etc.) -- and when they do, Yahoo's take is 50% of the sale.
- The newspaper opportunity is two-fold: Yes, newspapers should be able to increase their rates on inventory on their own local sites, as BT's increased effectiveness pushes up clickthrough rates. Early indications are good, with some buys going out at 50%+ and more. Secondly, though, newspapers are now able to sell Yahoo inventory have greatly increased the amount of stuff can sell. The amount of increased inventory varies market by market, but ranges from 2 to 4 times the amount of inventory newspapers have available on their own sites. The 50% share to Yahoo is high, but if the rates are high, it's a good new revenue stream for newspapers.