Have You Noticed That In The Recent Traditional Media Deals Announced By Google and Yahoo That They Are Not Spending Even One Penny On Buying Traditional Media Properties; You Can’t Pull The Wool Over Those New Media Eyes!

Google’s deal to place audio ads from new advertisers on 675 American Clear Channel radio stations has the advertising world in a tizzy. The deal came just a few days after Google announced it was buying online ad server DoubleClick for $3.1 billion (eMarketer headlined its analysis of that buy: “Google: Tomorrow the World?”) But notice the difference in the deals -- Google bought DoubleClick, but even though it could have bought all 1125 Clear Channel radio stations that had been on the market for several months it chose not to. At the end of the day Clear Channel is selling 450 stations in its smaller markets and is counting on Google to improve the revenue flow for the remaining big-market stations from advertisers not already on the books.

Notice the nuance – it’s okay doing business with traditional media, but don’t buy it. Save the billions for new media

And then there’s Yahoo’s deal with 12 large newspaper companies representing at least 264 newspapers. In its first stage, the newspapers will replace their own online employment ads with a link to Yahoo’s HotJobs service and the newspaper’s ads will be listed in the HotJobs database. It’s just the beginning -- other types of ads such as real estate and auto will be added later, the newspapers will use Yahoo search technology on their web sites, Yahoo will use the newspapers as its preferred source for local news – a real intertwining of the newspapers with Yahoo.

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But, again, Yahoo is just doing business with newspapers. It’s not buying them. When Knight-Ridder was up for sale neither Yahoo nor Google were in sight even though Knight-Ridder’s corporate headquarters were in San Jose, right at the southern tip of Silicon Valley.

Again, it’s one thing to do business with traditional media, but to buy into it -- no thanks!

And take a look back to those huge deals in 2005 when newspaper groups realized that to survive they had to have a big presence on the web and to do that quickly meant buying one’s way in. In that year alone, for instance, News Corp. paid $580 million cash for Intermix (MySpace). The owners didn’t want shares; they wanted and got cash. Dow Jones paid $520 million for Marketwatch.com. The owners didn’t want shares; they wanted and got cash. The New York Times Company paid $410 million for about.com. The owners didn’t want shares; they wanted and got cash. Spot a trend in all that?

Big important traditional media companies were basically told by the sellers that they had no faith in the future of newspapers so shares were no good and it would take cold hard cash to do the deals.

What is not lost in all of this is that it is new media that is mostly responsible for the ill fortunes of traditional media today – for newspapers in particular the classified ad spend has moved to online classified operators who are doing the job far better and cheaper than a newspaper’s own web site – and yet it is that very same new media that is now leading the charge to help out their traditional media buddies. After all, business is business.

Take that Yahoo deal. “This is an agreement that is critical for our future,” according to Robert W. Dechard, chairman and CEO of Belo Corp. Now that’s pretty strong language. No spin there. No nonsense about readership is up if print circulation and the newspaper web site unique visitors are taken into account. That Dechard statement was bottom-line talk, telling it like it is – newspapers are suffering really badly from their loss of classified revenues to the Internet, and unless they can regroup then survival in their current form may well be at issue.

There is some fear that Yahoo could make out like a bandit in this deal, stealing the newspapers’ branding thunder. The newspaper executives at these 12 newspaper groups – among the largest in the country (but not including the largest, Gannett and Tribune) are not stupid – they understand the branding risks, but their comments concentrate on basically that some white knight in shining armor was needed to ride in and save newspapers, and Yahoo is that Knight (but not Ridder).

In other words even though publishers are now going to have to share classified revenues with Yahoo, at the end of the day they will be better off than if they had continued to go it alone. After all, newspaper recruitment advertising used to worth some $9 billion in 2001, but according to Borrell Associates it is well under half of that today. Better to share something than to keep all of nothing.

McClatchy is the biggest new catch to the consortium that got its start last November with seven groups representing 176 newspapers. McClatchy is a minority partner with Gannett and Tribune in CareerBuilder, so it won’t be participating in the HotJobs part of the deal, but it is getting involved with stage two when newspapers and Yahoo will jointly sell online advertising and share the proceeds as they expand into real estate and auto ads. Newspapers will install Yahoo’s ad-serving software that allows them to display on their web sites graphical ads sold by Yahoo.

Why is McClatchy participating? “This is where the momentum is,” CEO Gary Pruitt says. His CareerBuilder partners don’t think so, however, and they have indicated they want no part of Yahoo, and will go their own way. They had tried very hard to take McClatchy with them in building their own national online ad network, but in the “Deal or No Deal” scenario, it was “No Deal”. That, in itself, is an indictment that basically says a new media company can do all of this better than traditional media trying to learn and emulate new media ways.

Pruitt says that Gannett and Tribune are welcome to join in the Yahoo consortium and they “have an open mind” in doing so, but the comments coming from Gannett and Tribune executives certainly don’t sound positive that they will, at least not in the short-term.

But for the 12 groups that have signed with Yahoo they are very much aware that newspaper share of local online advertising has fallen 8% this year to 36%, and yet Yahoo is boasting that its jobs advertising is gaining market share.

All the body language indicates that this is all rather a big coup for Yahoo and newspapers are glad they have been invited along. Yahoo ends up in the profitable advertising side of 264 newspapers with perhaps more to come, and it didn’t have to buy anything. For publishers, qualms or not, it boils down to that old adage, “If you can’t beat them, join them.”