Zillow, newspapers start real estate ad network

NEW YORK (Reuters) - U.S. home price comparison website Zillow.com and 11 U.S. newspaper publishers are starting an online advertising network to help each capture real estate advertising dollars.

The collaboration, which the companies expect to announce Monday, allows the publishers' and Zillow's sales teams to sell advertising space on each others' websites, making it easier for national advertisers to buy space across many sites at once rather than negotiating separate deals.

The agreement would allow Zillow to build its advertising business with retailers such as Lowe's and Macy's which cater to people who are moving to a new home, said Greg Schwartz, Zillow's vice president of advertising sales.

Newspaper publishers would benefit by giving their advertisers exposure outside their markets.

For example, an advertiser on the San Francisco Chronicle's website could reach not only Chronicle readers but also those outside the region who are searching for homes in the San Francisco area.

The ads are projected to reach 5.3 million monthly unique users at Zillow, as well as more than 57 million monthly unique visitors to the 282 newspaper websites owned by the 11 publishers.

The publishers, including Hearst Newspapers, Media General Inc and EW Scripps Co, are part of an existing deal with Zillow to carry each other's real estate ads.

Zillow is a venture capital-funded, privately held company that has raised $88 million. Its investors include Legg Mason, Benchmark Capital, TCV and PAR Capital.

The deal is unlikely to cause a spike in the amount of online revenue newspapers are making, but is a step that publishers are taking to fight a drop-off in ad sales that is forcing them to cut staff and costs.

"It would have been better if this were all happening much sooner, but I think it's a benefit to them, obviously," Sterling Market Intelligence analyst Greg Sterling said.

(Editing by Leslie Gevirtz)