Newspaper Troika Shaping Non-Yahoo! Network

Today’s Wall Street Journal reports that Gannett, McClatchy and Tribune (GMT) are shaping an “open network” to sell national online advertising, possibly replacing McClatchy’s Real Cities. The article says that network members are committing around 10 percent of their banner ad space to the network, and hope to announce a rollout “early this year.”

To be sure, national ads remain the low hanging fruit for online newspapers  local is hard  and are critically important to newspapers’ online efforts. According to Borrell Associates, national advertising constitutes 16 percent of print newspaper advertising and about 5 percent of newspaper online revenues. (Note: This is corrected from an earlier version of the post.)

On one level, the implications of the network are fairly obvious. Simplify, simplify, simplify. Agencies for major advertisers constantly complain about the difficulty of patching together a newspaper buy. The partners are seeking to counter Internet portals’ successful march into online banners from traditional newspaper advertisers such as GM, Ford, AT&T, Verizon, Target, Best Buy, etc.

On another level, however, there are already several functioning newspaper networks for national advertising (McClatchy’s own Real Cities, Centro, the NAA alliance with the National Newspaper Network, Lee’s DotConnect Media). The new GMT effort appears to be designed to focus the national sales effort, keep the agency shares in-house, and gently force McClatchy to share the upside of Real Cities, while building on the Real Cities’ infrastructure.

Strategically, perhaps there is an even bigger effort afoot: to pre-empt the planned-but-vague expansion of the 100-newspaper Yahoo! Hot Jobs consortium into national display ads. This is something that some of the Yahoo! consortium members  dubbed “the Seven Amigos” in the article  want to do. Others, however, have mixed feelings about it.

The WSJ article, in fact, ominously notes that “GMT is leery of the Seven Amigos’ agreement to use Yahoo’s technology to deliver advertising on the newspapers’ Web sites, according to a person close to the situation. Yahoo will then gain sensitive information such as which newspaper sites are doing well and which pages are most popular.”

To me, GMT seems to have figured out that it wants to do something that isn’t Real Cities, and that will take away from Yahoo!’s momentum with newspapers. But sticking to online-only buys and restricting membership in the network to newspapers might be too limited a vision. I bet they have more up their sleeves.

In a more ideal world, the GMT effort would be a great opportunity for the newspapers to form a one-stop sales force that would cut the burgeoning costs of their sales force  print and online. “Everyone has to have a national sales force these days. Everyone has to fly people to Minnesota to meet with Best Buy. It’s expensive,” noted one source.

But there are also doubts over how much impact such a network would have. Certainly, the GMT partners don’t have the same historical clout as the companies that in the past created New Century Networks, Classified Ventures and other efforts. We’re looking at a situation where the newspapers’ audience and ad shares have shrunk, McClatchy has shed several key titles, and Tribune’s very future is in doubt.

It is true that Gannett is now more intimately involved. But does it include USA Today? Indeed, the best performing national sites are not necessarily part of this. And it isn’t at all clear whether many external members of Real Cities  including the best performing national sites  will be joining this effort.

As for the advertisers, one source told me that the agencies simply won’t care. “Who  cares at this point?” he said. “Maybe instead of this, they should buy a Centro” that sells a broader roster of local online media, including Citysearch, TV, radio, etc.

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