Yahoo, Newspapers Partner In Online Job Ads; Other Deals Expected To FollowYahoo, Newspapers Partner In Online Job Ads; Other Deals Expected To Follow

Yahoo and seven newspaper companies have joined in building an ad-powered online jobs network, but the deal falls short of making the Web portal the online search engine for its partners' 150-plus publications.

The agreement unveiled Monday holds lots of potential for both sides in the fast-growing online advertising market. Besides job listings, Yahoo and the newspaper chains also would distribute news and other content to each other's sites, and share revenue from advertising wrapped around the material.

Newspaper companies aligning with Yahoo included Belo Corp., Cox Newspapers, Hearst Newspapers, Journal Register Co., Lee Enterprises, MediaNews Group, and The E.W. Scripps Co. The companies agreed to have Yahoo distribute their job listings through its HotJobs service, and ship its own listings to newspaper sites. Any existing deals between newspapers and Yahoo rivals, such as CareerBuilder.com and Monster, would be shifted to the Web portal.

"This is the exclusive part of our deal," William Dean Singleton, vice chairman and chief executive of MediaNews, said in a conference call with financial analysts and reporters.

The arrangement, which is being called a "consortium," comes at a time when both sides could use a boost. Newspapers have been working hard to build an online presence and ad network, as circulation and revenue in their traditional business erodes. Yahoo, on the other hand, is struggling to build momentum in online advertising built around search, a multi-billion-dollar market dominated by rival Google.

While Yahoo would be the exclusive search engine for job listings on newspaper sites, the deal didn't extend beyond that. Therefore, for example, Google would continue to power Web search for SFGate.com, which is the site for the San Francisco Chronicle, a Hearst newspaper.

"Other than employment, there's no immediate change in our relationships," Singleton said. "But we have chosen Yahoo as the partner of choice, so that could change in the future."

As it stands, the current deal is a good win for Yahoo, which gets access to the newspapers' readers and local businesses. If the portal can expand the arrangement to power all search functions, then it would greatly increase the size of its ad network in local markets.

"If they could have buttoned this down to really taking over search, then that would have been the cherry on top," Dustin Rector, analyst for Tier1 Research, said. "It's a good announcement, but it could have been so much more."

Nevertheless, the deal is expected to greatly increase the amount of news, sports, business, and other content from local markets on Yahoo, which in turn would provide a far larger online audience to newspapers. Either the newspapers or Yahoo could place ads that accompany the content, with both sharing revenue. Yahoo, in turn, could distribute content and its services, such as maps and event listings, on newspaper sites, with the same ad-selling arrangement.

From Yahoo's perspective, it sees an opportunity to tap those small and medium-sized businesses that don't yet advertise on the Web. There are 23 million businesses in the United States, and half don't advertise online, according to Yahoo. In addition, 35% of all online searches are for local businesses, services, and information.

"What the newspapers bring that really changes the game is local distribution," Daniel J. Finnigan, senior VP of HotJobs, said in the joint teleconference with Singleton and other newspaper and Yahoo executives. "It is a very, very big ocean, and we believe every business in the United States should be a part of this network."

A reason newspapers may not yet be ready to completely align themselves with Yahoo is the fact that it doesn't yet have a proven online search advertising system that matches the sophistication of Google's. Yahoo, which reported last month a weakening in ad sales in the third quarter, plans to recover through its recently launched Project Panama, a major upgrade to its search advertising platform.

"They definitely dropped the ball on [search], and that's why they're in the position they're in right now," Rector said.

Yahoo's latest partners, however, have left the door open for bigger deals in the future. The agreement around job listings will take effect immediately, with both sides working on expanding their advertising and content services well into next year.

"Beyond that," said Lincoln Millstein, senior VP of Hearst, "we see a world where we could continue to innovate and collaborate in many areas that potentially are even unforeseen as we speak today."