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February 28, 2009

Yahoo 1, Google 0

Doesn't happen very often but Yahoo has bested Google in a battle over local advertising. There is also a little bit of good news for struggling newspapers in the story by Miguel Helft which is in today's New York Times:

Through the partnership, ad salespeople at newspapers pitch local businesses on advertising packages that let them reach visitors to the newspapers' Web sites and Yahoo users in the area. The newspapers also use Yahoo technology that lets them charge more for ads on their sites…

"In 2009, this partnership is not material," said Hilary Schneider, executive vice president for North America at Yahoo, who is one of the driving forces behind the alliance. "If you look at the long-term opportunity, it is material, and it continues to exceed our expectations."

Yahoo is mobilizing the local sales forces, which are one of the remaining assets of devastated local papers, to make online ads part of the package they sell to local customers. This is a good service to the businesses buying the ads, which are generally not sophisticated enough to buy targeted online advertising themselves and which also do need to coordinate their print and online buying. The newspapers get more revenue and get to use Yahoo technology for better targeting on their own web sites; Yahoo gets good local advertising for its sites.

Google took the opposite approach. It tried to use its self-help advertising engine to sell remainder space in newspapers; but abandoned this effort after two years in January. Google has been hugely successful, of course, by taking orders for do-it-yourself advertising on the web. But it turns out that there is still a market for ads which need to be sold by salespeople who understand the customers, their needs, and the local markets.

Google's approach was to compete with the existing local sales force at newspapers; Yahoo's approach is to use the experience and contacts of these salespeople. Preliminary indications are that Yahoo got this one right.

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