Ken Doctor is a smart guy, and I enjoy reading his assessments of the industry. But I think he’s overreacting a bit in his recent post on the turbulence at Yahoo! and its impact on the newspaper consortium. Without a doubt, the papers I’m talking to are concerned. But they also realize there are several important things that are playing in their favor:
1. On Yahoo!’s search deal with Google: Ken is right that it’s unknown what the newspapers will get here. But it’s important to note that when the deal was negotiated, the guaranteed revenue was based on how Google, Yahoo and other contextual ads were performing on newspaper sites. Even if the Google ads were made available to the newspapers, there’s a strong chance the newspapers have a better deal as it’s currently structured than they would with Google contextual ads instead of Yahoo!
2. On the turbulence at Yahoo!: Yes, they are seeing a lot of turnover. But where AMP is concerned, we’ve seen nothing but razor focus and dedication. Yahoo! has staffed this effort very adequately and has significantly increased staff to work with the newspapers. With one exception, I’m not aware of any Yahoo!’s who are involved with the consortium who have moved on to other companies. In addition, Yahoo! is doing a bang-up job on AMP. It’s freakin’ impressive and I believe it will be a game changer for newspapers
3. On the contention that graphical and text ads will converge, Ken does have a valid point where yield is concerned. I don’t think the two ad formats will merge. They serve significantly different purposes. The real merger comes on how pages are monetized. A product like AMP might be able to look at all the available advertising opportunities on a page and decide which mix of graphical, text and other formats will drive the highest effective yield. If it happens to be a Google ad, so be it. Where I think Ken misses the point is that the potential to serve Google ads via AMP wouldn’t be detrimental to Yahoo! It’s actually to their advantage to have a mechanism that can make these decisions on pages across the Internet, helping myriad content providers to get the highest yield possible on their pages, regardless of the inventory served to get that yield. If I’m getting the highest yield possible, I’m not sure if I care if the ads come from Google, Yahoo!, Microsoft or the TV station I compete with in my market.
4. While Yahoo!’s woes do cause turbulence, I don’t think it calls into question the deal newspapers did with Yahoo! If anything, it makes the newspapers a key player in these talks and a force to be reckoned with regardless of the outcome. Without going into details, the Yahoo! deal has considerable change of control language baked into it (as every good contract does), and I think the newspapers are well protected.
Was the deal with Yahoo! a bad idea, or “playing with fire”? I really don’t think so. Yahoo! has been a stand-up partner thus far and I believe that will continue. The deal was a calculated risk, as are all major partnerships. But I wouldn’t call it playing with fire. If Yahoo! were to change hands, it puts the newspapers in a good spot to be a player in whatever emerges. I’m not saying I”d want Yahoo! to change hands. I think the newspapers are better served as things stand. But I wouldn’t rule out the possibility that the newspapers emerge stronger in a change of control.
In short, don’t count Yahoo! out. They still have incredible audience, great technology and smart people. And their current leadership strongly advocated the newspaper deal. Hang on to your hats. This is going to be an interesting ride.
Full disclosure: I was one of the newspaper execs who helped negotiate the deal with Yahoo!, and Maroon Ventures is acting as general manager of the newspaper consortium.
Posted by Bob Benz
