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Yahoo’s newspaper deal: the big picture

A Bank of America study says Online advertising will grow from $3.4 billion this year to $12.4 billion by 2010.

For quite a while, newspapers are losing revenue to online job sites and the so-called ‘Craigslist’ phenomenon.

Google vs. Yahoo question
Yahoo’s current deal again reinforces the idea that Yahoo’s focus is on content, while Google’s focus is on search and advertising. Moreover, Google is also moving into radio, TV and print advertising.

Yahoo has faced much flak this year – its shares are down 40%. The recent Peanut Butter Manifesto gives us a glimpse of the churnings in a so-called ‘underachieving’ media company.

While Google has been good at partnerships and big buyouts, before this deal, Yahoo has only done small buyouts. Moreover, these buyouts are in the same fields in which Yahoo already has a product.

Google also resells advertising space for 50 newspapers via a deal announced earlier this month. Google also works with The New York Times.

Significantly, Yahoo trails Google in the hot paid search market and that reflects in the two companies’ performance and market capitalization.

As of Yesterday, Google’s market Cap. Stands at $ 151.56 Billion , while Yahoo’s market cap. is 36.35 Billion. Google’s revenues were $2.69 billion for the third quarter of 2006, an increase of 70% compared to the third quarter of 2005 while Yahoo’s revenues were $1.58 billion for the third quarter of 2006, a 19 percent increase compared to $1.33 Billion for the same period of 2005.

Yahoo’s deal with 176 newspapers may help
The 176 newspapers are spread out in 38 states with a paid circulation of 12 million. Their web sites attract 58 million monthly visitors. Yahoo attracts 130 million monthly visitors. Yahoo knows that these papers operate in 13 of the top 15 national newspaper markets, including San Francisco,and Atlanta.

Under the deal, customers of the 176 newspapers can also place their recruitment ads on Yahoo’s HotJobs site, which has reportedly ‘28 million registered job seekers and hundreds of thousands of job listings searchable by location’.

Later, the news sites can also add Yahoo search tools, maps, event listings and other features. Yahoo sites will also carry the newspapers’ news content and archived news stories.

Questions
- Although analysts think that think this time around, Yahoo has done a broader deal than Google, there are some who might ask: Can Yahoo! and Local Papers Save Each Other?

- Some may say this deal is too little, too late.

- Others might point that local papers must focus on building better web sites, which promote user participation on a healthier scale.

posted by Pramit Singh @ 12:00 PM