Here at The Motley Fool, we believe individual investors should have the same access to information that Wall Street has. In that spirit, we've listened in on some investment bank conferences with major companies, and we're giving you the rundown. We call this feature "Fool on the Street."
Talks that once centered on scoring more local flavor for its HotJobs.com job listings site have expanded into true alliances with deep implications in online advertising, consumer targeting, and aggregating headlines.
It's been working, as the consortium has grown to cover 17 different media companies that represent roughly 400 daily newspapers.
Hilary Schneider, Yahoo!'s executive vice president of local markets and commerce, as well as the fledgling Yahoo! Publisher Network, spoke earlier this month during the newspaper network panel hosted during the Deutsche Bank Securities Media and Telecommunications Conference.
She was able to shed some light on the partnerships, as well as on the significance of the growing number of pairings in the consortium.
Going loco for local
The allure of hooking up with trusted papers is obvious. The brands are "synonymous with community," according to Schneider. That's the hot place to be at the moment, as paid search giants like Google
Schneider points out that local online advertising is projected to grow from $3.5 billion annually today to $12.5 billion over the next six years.
Yahoo! is setting up camp there, regardless of how the consortium pans out. 115 million of the 150 million unique domestic users that Yahoo! reaches in any given month have local intents. Whether it's using Yahoo!'s popular roadmaps to navigate around town or simply checking this morning's weather report, online portals like Yahoo! are already active destinations and home pages at the grassroots level.
In fact, newspaper websites may reach just 10% to 20% of their markets, while Yahoo! will find a way to reach between 70% and 80% of the wired locals. Things get even more complicated at the larger metropolitan newspapers, where half of the incoming traffic isn't even local.
So why is Yahoo! so hot to get in with the folks that are black and white and read all over? Well, it's ultimately incremental. Perhaps more importantly, it keeps the competition away.
Take this job and love it
Yahoo!'s biggest rival in assembling its consortium hasn't been Google or Microsoft's MSN. It has actually been Monster.com parent Monster Worldwide
While that's certainly a major part of the alliance -- Yahoo! will host 51 regional training sessions this year, training 3,000 newspaper sales reps to work with the JotJobs implementation -- the real beauty of the deal is the two-way flow of ads, sponsors, and technologies that will help improve the prospects of all active participants.
Lincoln Millstein, who heads up digital media for Hearst Newspapers, offered an example of how Yahoo!'s targeting technology has been sorely absent from newspaper websites with limited resources.
Newspapers have been successful in areas like autos and job listings online, but weak in real estate. The problem has been the plethora of junky leads from curious visitors with no real intent to make a move. Millstein points out how Yahoo! is able to sniff out higher-quality leads by knowing if someone who checked a listing has also looked into area schools or current mortgage rates.
The consortium participants aren't hogtied to the inventory of display ads that are available through Yahoo!'s network. The in-house sales forces aren't being replaced; they're simply being enhanced. This is a partnership, one in which both sides -- old media and new media -- feel that they'll benefit by working together.
If the local online advertising market really will grow nearly fourfold over the next six years, Yahoo! burying its head in the morning paper may be the best way to enjoy a fiscally balanced breakfast.
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Longtime Fool contributor Rick Munarriz is a huge fan of grassroots investing, but he doesn't want to hear Ricky Martin belt out "living la vida local" anytime soon. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.