Yahoo will be the exclusive provider of contextual and sponsored search ads for Viacom’s 33 broadband sites with the potential of expansion to another 140 Viacom sites under a multi-year deal announced today. The ads will be delivered using Yahoo’s new “Panama” platform, which has received good notices since its launch earlier this year. Release.
Update: The deal is generally seen as a plus for both companies. UBS analyst Ben Schachter quickly sent out a client note describing it as a positive for Yahoo to add “quality inventory & partner” and for Viacom’s stated goal of hitting $500 million in digital revenue in 2007. Schachter sees other key points for Yahoo, including the potential for a “deeper & more meaningful” relationship.
—He also picked up on Yahoo CEO Terry Semel’s non-too-subtle dig at Google in the press release: “Viacom ... shares Yahoo’s commitment to connecting users to the content, products and services for which they are looking while respecting copyrights and other intellectual property rights at the same time.” Semel made similar comments when Yahoo was announced as a launch distributor for NBCU-News Corp.‘s upcoming video-sharing JV. Guess we can expect to hear this refrain until some action by Google removes it as a talking point.
—Scott Kessler, analyst, S&P (via MKTW): “We are not surprised by Viacom’s decision, given its current issues with and lawsuit against Google.”
Two cents: So why does this matter in the grand scheme of things? Yahoo’s Panama is a major step for the company’s future and is being watched carefully for glimmers of hope/signs of cracks. Every “name” deal adds to the former; every deal lost adds to concerns that Panama is too late to help. Meanwhile, Viacom has to show meaningful digital progress, especially when it comes to ad revenue. Analysts are watching CEO Philippe Dauman and Viacom as carefully as Semel and Yahoo.
Update 2: There’s been some speculation about graphical or display advertising. Viacom currently sells its own display ads and I don’t get the sense there are any plans to change that. MTVN recently restructured its sales staff to improve multi-platform sales.