How MSFT/YHOO Could Affect Newspaper Consortium

How might the Microsoft/Yahoo search ad pact affect Yahoo’s newspaper partners? It’s a question I asked aloud Wednesday morning when the deal was officially announced. I contacted consortium watcher and all-around sector analyst/critic, Ken Doctor, to see what he thought. Well, turns out he posted his insights on his Content Bridges site.

He’s got some good stuff to think about, and overall seems to believe the pair-up will benefit the paper partners. The reason: Yahoo will be able to focus more on its display ad platform.

“Newspaper companies like being able to sell Yahoo.com inventory, a key part of the consortium deal….So if the deal gets DOJ approval, if it gets done ‘early next year,’ then, maybe Yahoo will focus more on the business that is key to Yahoo’s — and its newspaper partners’ — future: BT-driven display advertising,” writes Doctor. Evidently, the consortium’s executive director thinks Yahoo will be able to focus more on the needs of the paper partners now.

Doctor also thinks if the newspapers do transition from Yahoo to using Bing search on their sites, they may score higher ad revenues. However, newspaper sites may not get special treatment in Bing search results as they do with Yahoo’s Panama. “No Microsoft preference in this deal,” notes Doctor.

Over the past few days I’ve thought a lot about the deal, particularly the fact that Yahoo will no longer — we can assume — be investing in a search ad platform that will effectively be replaced by Bing. In terms of Yahoo’s search capabilities and innovation going forward, that doesn’t bode well. However, as Doctor suggests, we can expect Yahoo to now be freed up to continue improving its display ad platform.

And think about this: the fact that Yahoo will now handle search ad relationships with agencies and brand advertisers making medium-to-large buys on behalf of Microsoft as well as Yahoo, the company may be able to build client relationships that lead to more display advertising sales.