Broadcast dollars turn to digital pennies, as former NBC chief Jeff Zucker famously said. So as Yahoo brings on Katie Couric, the biggest of big-money TV anchor talent, how will they make it make the economics work?
Faced with consistently declining ad prices, Yahoo needs a shot of exclusive, high-profile content to get viewers to stick around and advertisers -- especially TV advertisers -- to pay attention. Ms. Couric made $15 million a year as anchor of the "CBS Evening News" and a reported $40 million a year as part of her expiring daytime talkshow syndication deal at ABC.
While we don't know how many pennies Yahoo will be showering on Ms. Couric, ad buyers consulted by Ad Age believe her presence on Yahoo's home page will boost pricing, adding millions to Yahoo's top line over the course of a year for the home page and Yahoo News alone.
Ms. Couric will only produce one interview a month at the outset, according to a person familiar with the matter. That means selling them as rare events and showing them to a vast portion of Yahoo's audience: 43 million unique visitors a month in the U.S., according to ComScore.
If she secures a high-value, in the news personality, on par with her interviews with Sarah Palin during the 2008 election cycle, they will drive advertiser interest in owning that content and its environment, meaning more robust upfront pricing.
"If she's able to secure a personality or politician that is a tough-to-get interview, then I do think there is going to be some scarcity value there [for advertisers]," said Susan Schiekofer, president-digital at MEC, a unit of ad giant WPP.
A Yahoo home-page takeover can run advertisers anywhere from $450,000 to $700,000 a day if it involves rich media elements like video or an exclusive event. A banner atop Yahoo News could add another $120,000 to the bill.
But adding Ms. Couric to the mix could send home-page pricing higher, perhaps as high as its Cyber Monday rates when it has charged more than $1 million for the days Ms. Couric's interviews air, at least for the first one. Yahoo could further juice that rate if previously untapped TV budgets were made available -- which they may be.
"[Ms. Couric's interviews] could attract some more conservative advertisers that have not wanted to get into that space [but will now] because she's a proven entity," Ms. Schiekofer said. Those advertisers "tend to be much heavier television advertisers. They are advertising digitally but in a careful way and this could help extend them more fully into the digital news category."
If that happens once a month, Yahoo adds $3.6 million to $6.6 million in incremental revenue over the coming year. It's not TV money, but Yahoo will take it.
And there could be upside to that depending on whom Ms. Couric can land, and if the interviews are spread out over several days. Ms. Couric's Sarah Palin interviews were cut into several segments and aired over time. Ms. Couric could also increase her frequency, particularly if "Katie" isn't renewed by ABC.
To be clear, it's not yet known how Yahoo plans to package these deals. However, they will likely be fixed-rate sponsorships that include pre-roll video ads and some supplementary display advertising -- like how TV networks typically sell their YouTube inventory. Yahoo declined to comment on the terms of Ms. Couric's deal or their plans to package her content for advertisers.
Assuming Ms. Couric is able to consistently draw an audience to justify that hypothetical seven-figure price tag, she could be worth a giant stack of pennies to Yahoo, and while certainly not worth what she's been paid on TV, enough to get by.
"With cord-cutting on the rise, people want to get their content from other places. Yahoo wants to fill that role. If Marissa pulls that off and pulls TV dollars with it, that will be a victory," said Colin Gillis, senior technology analyst and director of research at BGC Financial.