QuadrantONE moseyed out of the gate last week, after a few false starts. It got good ink because it offered good numbers: a potential of 50 million unique visitors waiting to be served in 27 of the top 30 markets. The new network will leverage sites owned by its four co-owners, Gannett (GCI), Tribune, Hearst and the New York Times (NYT), though neither the NYTimes.com nor USAToday -- national, not local -- sites are included.
QuadrantONE of course is not unexpected. News about it had leaked out a couple of times as Gannett and Tribune -- the two prominent holdouts from the Yahoo (YHOO) newspaper consortium -- have tried to put it together. They romanced a number of consortium members, including Cox and MediaNews. And where's McClatchy (MNI), Tribune and Gannett's sometimes partner? It is telling, though, that in the end only Hearst and the Times ponied up and joined in as equity partners.
How well will its staff of 17, anchored in TribuneLand (Chicago), fare?
My sense is that QuadrantONE faces an uphill challenge. Why? Consider these four things about QuadrantONE:
Scale: QuadrantONE's numbers sound big, but analyst Greg Sterling's Comscore chart of top-ranked networks show that it will place about 34th among those already established, already knocking on the doors of hyperactive, interactive buyers. Centro, at 23rd, clearly is supplying lots of revenue to local news properties already. Real Cities is still hanging around, as is the Newspaper National Network, which Greg notes in his post, Onion-like headlined "Newspapers Create Another Ad Network", is owned by the same companies starting up QuadrantONE. The new network may get bigger (where for instance are the LocalTV sites, now under common Tribune management under Randy Michaels) as other news chains join as affiliates, but it could still be sub-scale. Importantly, there is no clamor from the ad buyers -- to whom power in the marketplace is plainly moving from ad sellers -- for a new, local network. QuadrantONE: Y(et)A(nother)H(ierarchcal)O(nline)O(uting)?
Technology: The ad business is increasingly all about technology. We're leaving the selling space (newspapers) and time (broadcast) in the rear view mirror. Analytics is everything. Curiously, QuadrantONE says an unnamed technology partner is involved. My sources tell me that those companies pitched to join as equity partners weren't even told who the partner would be, a stumbling point that helped dissuade them. Coincidentally this week, Reuters Americas -- which is now coming on strong in the US market -- announced a deal with Guardian America to represent it for ad sales. I talked to Stephen Smyth, general manager of Americas Reuters Media, about the deal. He understands how technology isn't an add-on, but the very basis of a modern ad network. Who is Reuters affiliate ad network partnered with? Unlike QuadrantONE, he can name his partners in a flash: "Doubleclick for ad serving, Revenue Science for behavioral targeting, Operative for inventory management, Salesforce for CRM and Rapt for forecasting and pricing. The water level [in digital ad sales] is rising," he says. "Everyone needs to have numbers and the analytics to even be in on the RFP."
The Guarantee: Part of QuadrantONE's value prop is that it can guarantee space to advertisers, commanding 10% of member sites' inventory across vertical channels. That's a two-edged sword. It may be a value to advertisers -- although access to such site inventory hasn't been a loud hue and cry. But it's a deterrent to getting more sites to sign up as affiliates. There are lots of news site gm's with QuadrantONE affiliate agreements on their desk as we speak. These are sites/companies that decided they didn't want to put up the $500,000 or so each to fund the start-up. Now, they are wondering if they want to guarantee inventory (though maybe less than 10%) to a network that will determine pricing. Can QuadrantONE really deliver more than these sites can get themselves or from Centro and other networks? What if turns out to be more of a high-end remnant network than a high-CPM one?
Tribune: Yes, it's the new Sam Zell Tribune, but Tribune's still the elephant in this room. Going back now more than a decade, Tribune's been an elite presence. Count in New Century Network, CareerBuilder, Classified Ventures and more. As several would-be affiliates are mulling: Different people, but same feeling. Chicago-based. Tribune-led. The need for centralized (meaning Chicago-based Tribune) decision-making. That's one of the reasons Yahoo's HotJobs and consortium has mojo as CareerBuilder's struggling.
What cheers some in the industry is that it's one attempt for the newspaper industry to reclaim its future, to act independently. That thinking: QuadrantONE is a beachhead, a new place for newspaper leaders to come together, strategize together and streamline revenue opportunities and cost savings. That's a good hope, but one that mystifies me.
What, in fact, then is the Yahoo newspaper consortium? Take away the word Yahoo, and you have 22 companies with more than 500 titles agreeing to act (fairly) jointly. The consensus has been rare and the organizers of it deserve kudos for getting it done and achieving a kind of scale that hadn't been achieved before. Now, can they act together -- with Yahoo, yes, but with numerous others -- to seize the many opportunities to build new revenue streams and cut costs smartly (how about a single platform?)? Call it what you want -- consortium, QuadrantONE -- but that's clearly what these times demand.