KEY POINTS:
Telecom is making an aggressive play for the online advertising market through an internet partnership with Yahoo!7.
The joint venture announced yesterday will be called Yahoo!Xtra and will replace the existing XtraMSN site with new online content services due to go live on March 1.
Telecom chief operating officer of consumer business, Kevin Kenrick, said the partnership would allow it to target the "underdeveloped" online advertising market in New Zealand. "We see there is a fantastic opportunity to grow online advertising and the share of the online market," he said.
"Online advertising in New Zealand is getting to a tipping point of growth where there is a critical mass of online connections, broadband connections and an increase in the amount of time people are spending online."
Telecom planned to target a range of online advertising including classifieds, display and search but would not provide forecasts for advertising revenue.
Yahoo!7 chief executive Ian Smith said the company was achieving market growth of online advertising of between 50 and 60 per cent a year in Australia and believed it could do the same in New Zealand.
The announcement comes as Telecom tries to sell its Yellow Pages directories business. Kenrick said the two moves were complementary and the joint venture would let retain an involvement in the search area.
Kenrick said it had pursued the partnership with Yahoo!7 because it was "very difficult" for Telecom as a small player globally to develop content services in a market the size of New Zealand.
Telecom had talked to a number of online players including Google but picked the Yahoo group because it was in a top position in the world across a range of content services including TV and video, he said.
"The whole area of content management is one we thought would benefit from others with greater expertise and more scope," said Kenrick.
Yahoo!7 chief executive Ian Smith said the partnership gave it a great opportunity to leverage its tools, technology and platform in New Zealand.
Yahoo!7 is a 50-50 partnership between the Seven Network and Yahoo. Telecom shares closed up 5c yesterday at $4.76.
