Google, Yahoo Become Print's Allies

To Ensure Their Own Survival, Newspapers Are Happy to Partner With the Online Giants They Once Saw as Rivals

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NEW YORK ( -- As the dignitaries and ad executives visited New York late last month for the U.N. General Assembly and the fifth annual Advertising Week, a less conspicuous group gathered at Hearst Tower on Eighth Avenue. They represented most of the 784 newspapers now collaborating with Yahoo, a competitor in other contexts, to sell ads and attract readers. It was their third meeting -- and the first since Yahoo introduced a platform letting members sell ads across its sites as well as their own.

Fran Wills
"Most newspapers have embraced the internet and are devoting both dedicated and integrated resources to support it."
-- Fran Wills, Dallas Morning News
Lem Lloyd
"Yahoo, and some of the people now in leadership at Yahoo, deeply, deeply respect these companies."
-- Lem Lloyd, Yahoo Newspaper Consortium
Unusual enthusiasm developed. "It was very clearly an upbeat meeting," said George B. Irish, president of Hearst Newspapers, whose San Francisco Chronicle recently adopted the new platform, called Apt.

"It was excellent," said Leon Levitt, VP-digital media at Cox Newspapers. The company plans to start using the platform at its Atlanta Journal-Constitution and Austin American-Statesman. Its business selling display-ads online will grow 20% to 25% this year, Mr. Levitt said, but going up on Apt should help double that rate next year. "We realize now it's time for us to execute."

New rules
Newspaper publishers have been working with digital media since the Clinton administration, but their efforts often bore the conflict one sees at car companies trying to get past petroleum. The old ways worked so well for so long; the new ways are difficult to master.

Today, newspapers that don't figure it out will fail. They are sinking incredibly, faster and faster. The first half saw ad revenue drop 7.1% at local papers, 9.5% at national papers and 11% at Spanish-language papers, according to estimates from TNS Media Intelligence. That makes the declines of 2007 look like boom times, as local papers only gave up 5.7% in the first half, nationals lost 6.4% and Spanish-language slipped 4.4%.

Newspapers still collect more revenue than digital media. This year should see newspaper ad revenue drop 7.7% to $41.9 billion while internet and mobile ad revenue grows 20.9% to $26.6 billion, according to a PricewaterhouseCoopers forecast. But you can see where revenue is heading. No one knows if or when online will help newspapers stop their overall declines; last year papers found just 7% of their revenue on the web, the Newspaper Association of America estimated.

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Meanwhile the big publishers are taking body blows. Moody's Investors Service warned on July 29 that it might downgrade its rating on The New York Times Co. debt, which is already one step above speculative grade. Then Tribune, Lee Enterprises and E.W. Scripps all reported declines in online ad revenue in the second quarter. Advance Publications said it would close or sell the Star-Ledger in New Jersey if drivers didn't take pay cuts. The Star Tribune in Minneapolis skipped its quarterly interest payments to "conserve cash" for a restructuring that could include Chapter 11. Standard & Poor's just put Gannett on credit watch, signaling a probable downgrade.

And the recent calamities on Wall Street don't help anyone.

Rough terrain
Some publishers have also gotten tangled up trying to harness new media for themselves. Using the web to give readers a voice, for example, is a great idea, in theory. But papers from The Washington Post to the Chicago Tribune have resorted to temporary blackouts on commenting after vicious attacks piled up. The publisher of The Maui News just shut down reader comments permanently for "continual name-calling, crude language, profanity, slander, threats and racism."

The good news is that papers are learning. When the Chicago Tribune created an avatar, "Colonel Tribune," to promote articles through social media such as Digg and Twitter, the character initially "dugg" or "twittered" a lot of one-sentence headlines and links. The approach shared too much strategy with spam.

"I realized just pushing the stories was contrary to the spirit of social media," said Daniel Honigman, the Tribune's 24-year-old strategy coordinator for social media. "So then I started interacting on a one-to-one level. It kind of really established the persona of the Colonel as a man about town with a little bit of a sense of humor." The social-media team says it now drives about 8% of the Tribune's traffic.

Newspaper brands have simultaneously emerged as lighthouses online.

The New York Times leads the industry, with 11.6 million visitors in August, 47% more than in August 2007, according to ComScore Media Metrix. The combined sites of Tribune Co. newspapers attracted nearly 12.5 million people in August, up 34% from a year earlier.

Sharing gains
They aren't Facebook, which drew almost 41 million people in August, up 21%. But they're well-known, trusted and useful. Newspapers also have big local sales forces, which are increasingly catching up on the art of selling online ad space. All that is making newspapers appealing partners for the same companies that helped put them on the brink: the giants of new media. Newspapers, on the other hand, need to share new media's gains.

Here's one sign that promising partnerships are gelling: All 780 daily newspapers participating in Google's Print Ads program, which lets advertisers bid on print space, renewed their contracts with Google earlier this year. "Not only did they all re-up, we've actually been adding inventory since," said Spencer Spinnell, director of Google Print Ads. New papers are coming in, including Spanish-language, alternative weeklies and 70 college papers. "We're starting with business and trade publications as well," he added. "So the network is very healthy."

Neither Google nor its newspaper partners will quantify the new ad revenue they say Print Ads generates. But Google continues to invest in the platform, most recently adding tools allowing marketers to search for inventory that reaches readers with particular demographic attributes.

Google has played a key role in luring advertisers from their traditional haunts to the web, but it has also become a bit of an evangelist on newsprint. "Despite what's happening to circulation and readership, this is still a medium that connects with 50% of U.S. adults every day, and north of that on Sunday," Mr. Spinnell said.

"Partnerships have to kind of have, at their core, respect for each other," said Lem Lloyd, VP of the Yahoo Newspaper Consortium. The company has worked with many of the consortium's papers for the past two years, cross-selling employment ads on HotJobs and in print. "Yahoo and some of the people now in leadership at Yahoo deeply, deeply respect these companies."

Unlikely allies
You might think the McClatchy Co., which has felt a shift in fortunes this year sharp enough to prompt 2,250 job cuts, would resent the ascendant digital powers. Instead it has partnerships with Google, Yahoo and Microsoft.

"Yahoo has loads of unsold inventory in local markets," said Gary Pruitt, McClatchy's chairman, president and CEO. "We're able to sell into that under our partnership. They can sell advertising into our websites as well, using their national sales force."

George B. Irish
"It was very clearly an upbeat meeting."
-- George B. Irish, Hearst Newspapers
Leon Levitt
"Yahoo has been a great partner to us. Our goal is for them to continue to be a viable company so that we can continue this partnership."
-- Leon Levitt, Cox Newspapers
The Dallas Morning News, part of A.H. Belo, plans to start using Yahoo's new platform before the end of the year, said Fran Wills, senior VP-interactive and classified sales. The Morning News has already realized new traffic and revenue through its partnership with Yahoo. It has teamed up elsewhere to help its clients improve their search-engine marketing.

"At this point in the game, most newspapers have embraced the internet and are devoting both dedicated and integrated resources to support it," Ms. Wills said.

Other parties are emerging, or re-emerging. A Los Angeles start-up called the Rubicon Project promises to serve newspaper sites more-appropriate ads than the big ad networks. Mediaspace Solutions in Norwalk, Conn., uses the web to deliver verification and invoices for the campaigns it plans and buys online and in print, treading on Newspaper National Network turf. And the Associated Press has created a Digital Cooperative whose first product, the Mobile News Network, arrived in May. More than 500 papers have signed up for the AP's online Member Marketplace, which lets them share articles, photos and graphics.

Taking sides
For its part, Yahoo's consortium is making real converts of the papers in it. Last month the World Association of Newspapers, representing 77 newspaper groups, asked regulators to block a big partnership planned between Google and Yahoo. The companies' cooperation would undermine newspapers' online ad rates, the association said, and inflate the prices they pay for search ads.

Less than an hour after the global group's complaint, however, the Newspaper Association of America declared neutrality. "The NAA board of directors has taken no position on the proposed advertising partnership between Google and Yahoo," said the American CEO.

Cox Newspapers' Mr. Levitt said his company doesn't have a stand either -- but he does. "Yahoo has been a great partner to us," he said. "Our goal is for them to continue to be a viable company so that we can continue this partnership. If this helps that, that's good."
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