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On Monday, Advance Internet is announcing its new partnership with Microsoft (NASDAQ:MSFT), an agreement that tells us a few things about the emerging, post-recession marketplace.

Advance Publications, Inc., isn't a well-known name outside the industry. Yet, it's one of the major media companies in the country, encompassing through Conde Nast more than 20 top-drawer magazines (The New Yorker, Wired, Vanity Fair, Gourmet+), the apparently immortal Sunday Parade, the 42-city strong American City Business Journals group and cable interests, in addition to its 30 newspapers. A very private company, Forbes ranks it 41st among private companies in the country, taking in more than $7.5 billion.

So when Advance partners its online newspaper ad business with Microsoft -- when it zags when many of its peers are zigging -- it's worth taking note. The new partnership covers all the Advance newspaper properties, from Newark and Jersey City to Cleveland to Michigan to Portland, Oregon, with many in between. Advance Internet operates as a division, separate from the company's newspapers, but is set up to leverage all those papers' content and sales forces.

The new partnership -- already launched in part -- parallels the Yahoo Newspaper Consortium, but differs from it in one important respect.

What's the same:

  • Advance Internet's own salespeople, and then the vanguard of its newspaper sales reps, will sell into the Microsoft Media Network, encompassing all the Microsoft sites. So, in essence, Advance will greatly expand what its sales teams can offer local advertisers. The idea and the centerpiece of the deal for Advance: the ability to offer local businesses additional marketing solutions, multiplying Advance's sales.
  • Advance Internet will use the capabilities of the Microsoft ad technologies -- among them behavioral targeting (BT) and re-messaging (following would-be customers as they move about the web)
  • The deal connects Advance and Microsoft directly on paid search products. Microsoft will deliver its text ads both through its paid search and contextual-reading ad products. Microsoft paid search ads will replace Google paid search on Advance sites.

The main difference: Advance Internet is maintaining its own ad platform, currently powered by 24/7 RealMedia, and integrating with Microsoft. Yahoo Newspaper Consortium members have fully adopted the Yahoo APT platform for their ad serving businesses, creating a closer, more exclusive relationship. "We wanted flexibility," Peter Weinberger, president of Advance Internet, tells me. Weinberger won't specify what parts of the deal involve exclusivity or the duration of the contract.

So, we can read the move in several ways:

  • First, Microsoft is really coming back -- to the newspaper world. After Sidewalk, after all kinds of attempted relationships, Microsoft -- soon to be half of the Google/Microsoft search duopoly -- is once again seeing the benefits of the newspaper company local connection. Advance Internet is the first major local news company reselling display ads into the Microsoft Media Network, Peter MacDonald, who is Microsoft's PubCenter Director of Business Development, Advertiser and Publisher solutions, told me. Haven't heard of the Microsoft Media Network? It was formed in February, rolled up from various Microsoft businesses, well-described here by ClickZ. Among the other big media companies named as collaborating on the new underlying PubCenter platform are IAC, Dow Jones Online, The New York Times Co., Time Inc., and Viacom.

With the Advance deal, it gets good local sales potential -- those feet-on-the-street that are the envy of companies that are cubicle-bound and technology-centered. Recall that in the Microsoft/Yahoo deal, Microsoft's Bing and paid search businesses will power not only Yahoo, but apparently all the newspapers sites in the consortium. That will mean that the majority of newspaper sites (with the big exceptions of Gannett, Tribune, the New York Times and the Washington Post, among others) will see critical parts of their business powered by Microsoft.

  • We all see that the shape of the new battle for local ad dollars. Face it, online newspaper growth has slowed dramatically. We're seeing reading patterns harden in the marketplace, and it's leaving newspaper sites underwhelmed. Yes, they can claim as Advance does -- "according to Media Audit, five of our sites rank in the top 10 of newspaper affiliated sites based on local penetration of adults 18+" -- to be strong locally. But time on site across the news industry is paltry, less than 12 minutes a month in most cities, according to Nielsen data. That means they must sell much more than tired old banners on their own sites. The solutions, here and in the Yahoo consortium: 1) sell more products, in addition to display; and 2) sell Other People's Inventory and networks; in Advance's case, Microsoft's.

As I've noted, this new math is compelling -- many smaller advertisers never could afford print and offer a new business, as the old business has permanently thinned.

Further, this is a market newspaper companies must win if they have any hope of maintaining their already-downsized newsrooms. They're not winning it now. According to Borrell Associates, roughly half of the $14 billion local online ad market is going to the pure plays -- Google, Yahoo, Microsoft, AOL and smaller sites without legacy media businesses. Only a quarter of it is going to newspaper companies. Newspapers' strength is in non-targeted display advertising; they're minor players in the fastest-growing online ad segments of paid search and direct marketing.

If Advance and other newspaper chains see the local opportunity, they aren't alone. Yellow Pages companies, with their own veteran feet, see it, as witnessed by the recent ATT/Yahoo tie-up. (Content Bridges" "5000 New Competitors Just Landed in News Markets." Broadcasters see the new markets opening as well -- all those small businesses that used to be "too small to sell", businesses that have gotten a taste of self-service keyword advertising, but would like some help in putting together better, smarter campaigns. Both YP and broadcast companies are part of the Microsoft reseller program that Advance just joined, in fact. Conversely, Weinberger notes that with the new programs "we can go after broadcast dollars."

It's a coming free-for-all.

So it's a race, a "consultative" sales race. As I talk to newspaper publishers, broadcast execs, YP honchos, all will tell war stories of how hard it is to transform their legacy sales forces. How do you re-train "order-takers" for the new world order of selling targeting, networks and re-messaging? It's a race of turtles to some degree, but it is to those competing turtles that the Yahoo and Microsoft have turned, as ironic as that is in lots of ways.

The new world order of hyper-targeted, sold and serviced both by (self-serve) computers and flexible, innovative human salespeople is certainly not here yet. Whoever gets there first stands to build sizable new businesses. For those of us who care about the news world, we'd hope that these new business builders are somehow connected to local news enterprises, but there is no reason they need to be. Yes, the buy-our-site-plus approach makes sense, and may offer initial advantage, but ultimately, whoever can bring results by best harnessing the diverse marketing environment wins.

What do we make of Advance's zag? Well, as the lone newspaper play for Microsoft, it stands to get some attention, which may help in a business that requires really good execution all around.

Microsoft is though the #3 player in many online ad categories, and that might mean lower pricing, and maybe lower yield, at least for now. In addition, it's always been challenged by ad-based business execution, itself, and still seems plagued by an alphabet soup of names for its ad-related product set. Currently, Microsoft's adCenter counts 90,000 advertisers in the US and elsewhere.

What makes sense to me, conceptually at least, is that Advance is trying to remain at the solid center of its business. Here, it is leveraging Microsoft technology and network assets, but is not bound to its platform.

In a related local sales expansion that began in spring, Advance has been working with four different SEM (search engine marketing) re-sellers, testing out which (WebVisible, Yodle, among them) may optimize results and pricing best. "Paid search is the inroads," says Peter Weinberger. "It's a huge product for us."

Selling local merchants -- that consultative selling, again -- SEM services as well as direct advertising enlarges local media's role in the marketplace. Here, too, numerous newspaper, broadcast and YP companies are re-selling SEM services as well, so the competition grows and becomes more head-to-head.

The Advance principle here -- test partners, partner strongly, maintain the flexibility to change partners -- makes sense in what will continue to be a hyper-changing landscape. As we move into 2010, and look at (public) company earnings, we'll be able to separate out the companies that are truly transforming themselves into digital content-and-sales leaders from the also-rans.

Source: Microsoft's First Big Newspaper Partnership