Watch CBSN Live

paidContent - What The Advance/Microsoft Deal Means For The Newspaper Business

This story was written by Ken Doctor .

Ken Doctor analyzes the news business on his blog Content Bridges and for Outsell, an information-market analytics firm. He worked at Knight Ridder for 21 years and was an executive in content services, strategy and editorial for the companys digital unit.

The Advance Internet-Microsoft (NSDQ: MSFT) partnership announced today tells us a few things about the emerging, post-recession marketplace.

Advance Publications, Inc., isn’t a well-known name outside the industry. Yet, it’s one of the major media companies in the country, encompassing through Conde Nast more than 20 top-drawer magazines (The New Yorker, Wired, Vanity Fair, Gourmet+), the apparently immortal Sunday Parade, the 42-city strong American City Business Journals group and cable interests, in addition to its 30 newspapers. Forbes ranks it 41st among private companies in the country, taking in more than $7.5 billion.

So when Advance partners its online newspaper ad business with Microsoft—zagging when many of its peers are zigging—it’s worth taking note.

The new partnership covers all the Advance newspaper properties, from Newark and Jersey City to Cleveland to Michigan to Portland, Ore., with many in between. Advance Internet operates as a division, separate from the company’s newspapers, but is set up to leverage all those papers’ content and sales forces. 

The new partnership—already launched in part—parallels the Yahoo (NSDQ: YHOO) Newspaper Consortium, but differs from it in one important respect.

What’s the same:

  * Advance Internet’s own salespeople, and then the vanguard of its newspaper sales reps, will sell into the Microsoft Media Network, encompassing all the Microsoft sites. So, in essence, Advance will greatly expand what its sales teams can offer local advertisers. The idea and the centerpiece of the deal for Advance: the ability to offer local businesses additional marketing solutions, multiplying Advance’s sales.
  * Advance Internet will use the capabilities of the Microsoft ad technologies—among them behavioral targeting and re-messaging (following would-be customers as they move about the web)
  * The deal connects Advance and Microsoft directly on paid search products. Microsoft will deliver its text ads both through its paid search and contextual-reading ad products. Microsoft paid search ads will replace Google (NSDQ: GOOG) paid search on Advance sites.

The main difference: Advance Internet is maintaining its own ad platform, currently powered by 24/7 RealMedia, and integrating with Microsoft. Yahoo Newspaper Consortium members have fully adopted the Yahoo APT platform for their ad serving businesses, creating a closer, more exclusive relationship. “We wanted flexibility,” Peter Weinberger, president of Advance Internet, tells me. Weinberger won’t specify what parts of the deal involve exclusivity or the duration of the contract.

So, we can read the move in several ways:

  * First, Microsoft is rally coming back—to the newspaper world. After Sidewalk, after all kinds of attempted relationships, Microsoft, soon to be half of the Google/Microsoft search duopoly, is once again seeing the benefits of the newspaper company local connection. Advance Internet is the first major local news company reselling display ads into the Microsoft Media Network, Peter MacDonald, Microsoft’s PubCenter Director of Business Development, Advertiser and Publisher solutions, told me. Haven’t heard of the Microsoft Media Network?  It was formed in February, rolled up from various Microsoft businesses, well-described here by ClickZ. Among the other big media companies named as collaborating on the new underlying PubCenter platform are IAC (NSDQ: IACI), Dow Jones (NYSE: NWS) Online, The New York Times Co. (NYSE: NYT), Time Inc., and Viacom.

With the Advance deal, it gets good local sales potential—those feet-on-the-street that are the envy of companies that are cubicle-bound and technology-centered. Recall that in the Microsoft/Yahoo deal, Microsoft’s Bing and paid search businesses will power not only Yahoo, but apparently all the newspapers sites in the consortium. That will mean that the majority of newspaper sites (with the big exception of Gannett (NYSE: GCI), Tribune, the New York Times and the Washington Post (NYSE: WPO), among others) will see critical parts of their business powered by Microsoft.

  * We all see the shape of the new battle for local ad dollars. Face it, online newspaper growth has slowed dramatically. We’re seeing reading patterns harden in the marketplace, and it’s leaving newspaper sites underwhelmed. Yes, they can claim, as Advance does,—“according to Media Audit, five of our sites rank in the top 10 of newspaper-affiliated sites based on local penetration of adults 18+”—to be strong locally. But time on site across the news industry is paltry, less than 12 minutes a month in most cities, according to Nielsen data. That means they must sell much more than tired old banners on their own sites. The solutions, here and in the Yahoo consortium: 1) sell more products, in addition to display; and 2) sell other people’s inventory and networks; in Advance’s case, Microsoft’s.

As I’ve noted, this new math is compelling. Many smaller advertisers never could afford print, but they can afford online, and that means the potential of hundreds and thousands of new customers in every metro marketplace. Further, this is a market newspaper companies must win if they have any hope of maintaining their already-downsized newsrooms—and they’re not winning it now.

For the full post, go here

By Ken Doctor

View CBS News In
CBS News App Open
Chrome Safari Continue